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CANADA FX DEBT-Canadian dollar rallies to 2-month high as economies reopen

    * Canadian dollar rises 1.1% against the greenback
    * Loonie hits strongest level since March 16 at 1.3817
    * Price of U.S. oil increases 4%
    * Canadian bond yields rise across a steeper curve

    TORONTO, May 26 (Reuters) - The commodity-linked Canadian
dollar strengthened to a two-month high against its U.S.
counterpart on Tuesday as steps to reopen the world economy
boosted investor sentiment.
    World shares forged ahead and commodity markets drove higher
as investors disregarded Sino-U.S. tensions to focus on the
easing of lockdowns and a potential coronavirus vaccine.
            
    The price of oil, one of Canada's major exports, was
supported by growing confidence that producers are following
through on commitments to cut supplies and rising fuel demand as
coronavirus lockdowns ease. U.S. crude        prices were up 4%
at $34.58 a barrel.             
    At 9:19 a.m. (1319 GMT), the Canadian dollar          was
trading 1.1% higher at 1.3826 to the greenback, or 72.33 U.S.
cents. The currency touched its strongest intraday level since
March 16 at 1.3817.
    Bank of Canada Governor Stephen Poloz and Senior Deputy
Governor Carolyn Wilkins are due to appear before the Standing
Senate Committee on National Finance at 5 p.m. (2100 GMT).
    On Monday, Poloz, whose successor Tiff Macklem takes over on
June 3, said the central bank's dominant concern has been with
the possibility that deflation could emerge and that its policy
framework gives it flexibility in the time it takes to get
inflation back to target.             
    Canadian government bond yields were higher across a steeper
yield curve in sympathy with U.S. Treasuries. The 10-year yield
            rose 6 basis points to 0.549%.

 (Reporting by Fergal Smith; Editing by Bernadette Baum)
  
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