(Adds dealer quotes and details throughout; updates prices) * Canadian dollar dips 0.1% against the greenback * Producer prices in Canada rise by 0.3% in August * Price of U.S. oil settles 3.2% lower * Canada's 10-year yield eases 1.1 basis points to 0.538% By Fergal Smith TORONTO, Sept 29 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Tuesday as oil prices fell and investors waited for the currency to extend this month's decline before stepping in to buy it, with the loonie sticking to its recent trading range. The loonie was trading 0.1% lower at 1.3381 to the greenback, or 74.73 U.S. cents, having matched intraday Friday's 7-week low at 1.3418. The currency has fallen 2.5% this month as rising coronavirus cases in some parts of the world spooked financial markets. "Client feedback suggests that there should be some decent U.S. dollar selling activity if we go north of 1.35, which should cap it," said Simon Côté, managing director, risk management solutions, National Bank Financial. "There will have to be some decent risk-off sentiment for the dollar to go higher than that." Canada runs a current account deficit and is a major producer of commodities, including oil, so the loonie tends to be sensitive to the global flow of trade and capital. U.S. crude oil futures settled 3.2% lower at $39.29 a barrel on worries about the outlook for fuel demand as Europe and the United States grappled with a surge in new coronavirus infections. Producer prices in Canada rose by 0.3% in August from July on higher prices for primary non-ferrous metal products, Statistics Canada said. Still, prices were down 2.3% compared to the same month last year. Canada's GDP data for July is due on Wednesday, which could help guide expectations about the strength of economic recovery. Canadian government bond yields eased across a flatter curve, with the 10-year dipping 1.1 basis points to 0.538%. (Reporting by Fergal Smith Editing by Nick Zieminski and Alistair Bell)
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