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CANADA FX DEBT-C$ rebounds from 3-week low as oil rallies, BoC sticks to economic support

 (Adds investor quotes and details throughout; updates prices)
    * Canadian dollar rises 0.5% against the greenback
    * Loonie touches its lowest level since Aug. 17 at 1.3259
    * Price of U.S. oil increases 2.2%
    * Canadian bond yields trade mixed across a steeper curve

    By Fergal Smith
    TORONTO, Sept 9 (Reuters) - The Canadian dollar rose against
the greenback on Wednesday as oil prices rallied and the Bank of
Canada maintained a pledge to support the economy as it moves
into a recuperation phase, with the loonie rebounding from an
earlier three-week low.
    The Canadian dollar        was trading 0.5% higher at 1.3164
to the greenback, or 75.96 U.S. cents. The currency hit its
weakest intraday level since Aug. 17 at 1.3259.
    The Bank of Canada held its key overnight interest rate
steady at 0.25%, as expected, and said the bounce-back in
economic activity in the third quarter looks to be faster than
previously anticipated.             
    Still, the economy will continue to require extraordinary
monetary policy support as it moves from a reopening phase to
recuperation, the central bank said.
    "All the low-hanging fruit has basically been harvested and
now it's virus dependent and a slow grind," said Darcy Briggs, a
portfolio manager at Franklin Templeton Canada.    
    The price of oil, one of Canada's major exports, clawed back
some of the losses it sustained in the previous session, but a
rebound in COVID-19 cases in some countries undermined hopes for
a steady recovery in global demand.             
    U.S. crude        prices were up 2.2% at $37.56 a barrel,
while Wall Street bounced as a rout in technology shares halted
and investors shrugged off news that AstraZeneca had paused
global trials of its experimental coronavirus vaccine.
                
    Canadian housing starts rose 6.9% in August compared with
the previous month to a seasonally adjusted annualized rate of
262,396 units, adding to evidence of economic recovery.
Economists had expected starts to fall to 220,000.              
  
    Canadian government bond yields were mixed across a steeper
curve in sympathy with U.S. Treasuries. The 10-year            
climbed 1.6 basis points to 0.582%.

 (Reporting by Fergal Smith; editing by Jonathan Oatis and Steve
Orlofsky)
  
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