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CANADA FX DEBT-Canadian dollar nears 7-month high as home sales surge

    * Canadian dollar rises 0.5% against the greenback
    * Canadian home sales rise 26% in July from June
    * Price of U.S. oil increases 1.1%
    * Canadian bond yields fall across a flatter curve

    TORONTO, Aug 17 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Monday as oil prices climbed and
domestic data showed a surge in home sales to a record high,
with the loonie nearing its strongest level in nearly seven
months.
    Canadian home sales rose 26% in July from June, posting the
highest monthly level ever recorded, the Canadian Real Estate
Association (CREA) said, as pent-up demand following lockdowns
continued to fuel the market.             
    The price of oil, one of Canada's major exports, rose as
China's plans to increase U.S. crude imports countered rising
tensions between the two major consumers.             
    U.S. crude        prices were up 1.1% at $42.49 a barrel,
while the Canadian dollar        was trading 0.5% higher at
1.3201 to the greenback, or 75.75 U.S. cents. The currency,
which last Thursday touched its strongest intraday level since
Jan. 30 at 1.3188, traded in a range of 1.3195 to 1.3262.    
    The U.S. dollar fell against a basket of major currencies
ahead of the release of minutes this week of the Federal
Reserve's last policy meeting. Speculation is rife the U.S.
central bank will adopt an average inflation target.
            
    Speculators have raised bearish bets on the loonie to the
highest in seven weeks, data from the U.S. Commodity Futures
Trading Commission showed on Friday. As of Aug. 4, net short
positions had increased to 23,195 contracts from 12,496 in the
prior week.
    Canadian Prime Minister Justin Trudeau and Finance Minister
Bill Morneau are scheduled to meet on Monday in a bid to sort
out their differences, said a Reuters source aware of the
meeting.             
    Canadian government bond yields were lower across a flatter
curve in sympathy with U.S. Treasuries. The 10-year            
fell 2.9 basis points to 0.584%, extending its pullback from a
two-month high last Thursday at 0.642%.

 (Reporting by Fergal Smith
Editing by Paul Simao)
  
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