* Canadian dollar weakens 0.2% against the greenback * Loonie is little changed for the week * US cuts off trade talks with Canada * Canadian bonds ease across the curve By Fergal Smith TORONTO, Oct 24 (Reuters) – The Canadian dollar weakened against its U.S. counterpart on Friday as trade negotiations between Ottawa and Washington broke down and markets looked ahead to an expected Bank of Canada interest rate cut next week. The loonie was trading 0.2% lower at 1.4015 per U.S. dollar, or 71.35 U.S. cents, after moving in a range of 1.3975 to 1.4039. For the week, the currency was nearly unchanged. U.S. President Donald Trump is frustrated with Canada over trade negotiations that have not been going well, White House economic adviser Kevin Hassett said after Trump cut off trade talks between the two countries. "The trade headline reinforces the pessimism around CAD and its fundamental backdrop is still pretty weak, so I think people are still happy to buy USD-CAD on dips until the growth side in Canada looks better," said Erik Nelson, a macro strategist at Wells Fargo Securities in London. Speculators have raised bearish bets on the Canadian dollar to the highest level since April, according to the latest data from the U.S. Commodity Futures Trading Commission, which was produced before the federal government shutdown. "I don't think inflation alone is going to help the loonie," Nelson said. "We still think the Bank of Canada is going to cut next week, so I think the Canadian dollar continues to be a laggard." The Bank of Canada will reduce its target for the overnight interest rate by 25 basis points to 2.25% on October 29 to support a weak economy, according to a Reuters poll. Canada's inflation rose to 2.4% last month from 1.9% in August, but will remain largely contained around the middle of the BoC's 1%-3% target range over the coming years, the poll showed. The U.S. dollar was little changed against a basket of major currencies after U.S. inflation data kept the Federal Reserve on track to cut rates again next week. Canadian bond yields moved lower across the curve, with the 10-year down 2.6 basis points at 3.077%. (Reporting by Fergal Smith; Editing by Paul Simao)
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