* Canadian dollar weakens 0.2% against the greenback * Canadian retail sales rise 0.6% in July * Price of U.S. oil increases * Canadian bond yields ease across the curve TORONTO, Sept 18 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Friday as domestic data showed a drop in underlying retail sales in July, with the loonie on track to end lower for the second straight week. Canadian retail sales in July rose by 0.6%, Statistics Canada said, adding that August sales probably gained 1.1% on the month. Core retail sales, which exclude sales at motor vehicle and parts dealers and gasoline stations, declined 1.2% in July. Separate data from Statistics Canada showed that wholesale trade increased by 4.3% in July from June, stronger than the 2% gain that analysts had forecast, to surpass pre-COVID-19 levels. The Canadian dollar was trading 0.2% lower at 1.3187 to the greenback, or 75.83 U.S. cents, having traded in a range of 1.3137 to 1.3197. For the week, the loonie was down 0.1%. A recent surge in COVID-19 cases is forcing Canadian Prime Minister Justin Trudeau to scale back his plan to outline an ambitious green economic recovery package next week. U.S. crude prices were up 0.4% at $41.12 a barrel on Friday, adding to this week's advance despite Libyan commander Khalifa Haftar saying that a blockade on Libyan oil exports, which has been in place since January, would be lifted. Oil is one of Canada's major exports. The Teranet-National Bank Composite House Price Index, which measures changes for repeat sales of single-family homes, showed prices were up 0.6% in August from July, with the pace of the advance just shy of the average gain for the month as the housing market showed signs of picking up. Canadian government bond yields were lower across the curve, with the 10-year down 1.5 basis points at 0.558%. (Reporting by Fergal Smith; editing by Jonathan Oatis)
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