CANADA FX DEBT-C$ recovers from near 3-week low as oil prices rise
* Canadian dollar at $1.3400, or 74.63 U.S. cents * Loonie touches weakest level since Oct. 1 at C$1.3434 * Bond prices lower across the yield curve TORONTO, Dec 20 (Reuters) - The Canadian dollar strengthened slightly against its U.S. counterpart on Tuesday, recovering from near a three-week low earlier, as higher oil prices and stronger-than-expected domestic data offset broader gains for the greenback. The value of Canadian wholesale trade rose 1.1 percent in October, the biggest gain in five months, data from Statistics Canada showed. In volume terms, sales were up 0.9 percent, which could bode well for broader economic growth at the start of the fourth quarter. Prices of oil, one of Canada's major exports, rose on forecasts of a steep draw in U.S. crude oil stocks that could indicate a global oversupply is starting to shrink. U.S. crude prices were up 0.88 percent at $52.58 a barrel. At 9:09 a.m. EST (1409 GMT), the Canadian dollar was trading at C$1.3400 to the greenback, or 74.63 U.S. cents, stronger than Monday's close of C$1.3417, or 74.53 U.S. cents. The currency's strongest level of the session was C$1.3396, while it touched its weakest intraday level since Oct. 1 at C$1.3434, pressured by the recent drop in Canadian yields below U.S. Treasuries. The U.S. dollar made a fresh 14-year high, boosted by upbeat comments from Federal Reserve Chair Janet Yellen that kept alive market expectations for swifter U.S. interest rate hikes next year than had been expected. The yen fell after the Bank of Japan held policy steady and fallout from attacks in Germany and Turkey subdued the euro. Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year price fell 4 Canadian cents to yield 0.823 percent and the benchmark 10-year declined 17 Canadian cents to yield 1.803 percent. The 10-year yield fell 1.3 basis points further below its U.S. equivalent to a spread of -77 basis points as U.S. Treasuries underperformed. Reports on Canadian inflation for November and retail sales for October are due on Thursday, while gross domestic product data for October is awaited at the end of the week. (Reporting by Fergal Smith; Editing by Paul Simao)
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