* Canadian dollar gains 0.4% against the greenback
* Touches its strongest since Feb. 22 at 1.3455
* Canada posts a trade surplus in January
* 10-year yield hits a near 5-week low
TORONTO, March 7 (Reuters) - The Canadian dollar strengthened to a two-week high against its U.S. counterpart on Thursday as dovish comments by Federal Reserve Chair Jerome Powell pressured the greenback and domestic data showed the trade balance swinging into surplus in January.
The loonie was trading 0.4% higher at 1.3455 per U.S. dollar, or 74.32 U.S. cents, its strongest level since Feb. 22.
"Today's a bit more of a (U.S.) dollar story," said Alex Cohen, an FX Strategist at BofA Securities. "That's in large part due to Powell's testimony."
The U.S. dollar fell against a basket of major currencies as Powell said in a hearing before the U.S. Senate Banking Committee that the Fed was "not far" from gaining the confidence it needs in falling inflation to begin cutting interest rates.
Canada recorded a bigger-than-expected trade surplus of C$496 million ($367.73 million) in January after a revised C$863 million deficit in December, but the details didn't impress some economists, showing a decline in both export and import volumes.
Canadian employment data, due on Friday, could offer further clues on the strength of the economy. Economists forecast Canada's economy adding 20,000 jobs in January.
The loonie was adding to its gains on Wednesday when the Bank of Canada said it was too early to consider easing rates as it kept its benchmark rate on hold at a 22-year high of 5%.
Some investors had thought the BoC would lean "more on the dovish side" due to recent softening in the Canadian economy, Cohen said.
The price of oil, one of Canada's major exports, settled 0.25% lower at $78.93 a barrel, while Canadian bond yields edged higher across the curve.
The 10-year was up 1.8 basis points at 3.368% after earlier touching its lowest level since Feb. 2 at 3.303%. (Reporting by Fergal Smith, Editing by Nick Zieminski)
