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CANADA FX DEBT-C$ firms as domestic data adds to evidence of economic recovery

    * Canadian dollar rises 0.2% against the greenback
    * Canadian factory shipments rise 7.0% in July
    * Canadian home sales climb to a record high in August 
    * Canadian bond yields move higher across the curve

    TORONTO, Sept 15 (Reuters) - The Canadian dollar gained
ground against its broadly weaker U.S. counterpart on Tuesday as
oil prices rose and domestic data showed further recovery in
factory shipments, but the move was restrained ahead of a
Federal Reserve policy decision this week.
    Canadian factory sales rose for the third straight month in
July, adding to evidence of economic recovery from the
coronavirus pandemic. Sales were up by 7.0% from June on higher
motor vehicle sales, as well as petroleum and coal, Statistics
Canada said.             
    Separate data, from the Canadian Real Estate Association,
showed that home sales increased 6.2% in August to reach a
record high.
    The loonie        was trading 0.2% higher at 1.3150 to the
greenback, or 76.05 U.S. cents. The currency traded in a range
of 1.3134 to 1.3186.     
    The U.S. dollar        fell against a basket of major
currencies as data showing an acceleration in China's industrial
output helped boost risky currencies, with the yuan
strengthening to a 16-month high.             
    The Fed starts a two-day policy meeting on Tuesday, the
first since unveiling a landmark shift to a more tolerant stance
on inflation in August. 
    The price of oil, one of Canada's major exports, rose
despite forecasts of a slower than expected recovery in global
fuel demand due to the coronavirus pandemic. U.S. crude       
prices were up 0.6% at $37.48 a barrel.                 
    Canada's inflation report for August is due on Wednesday,
while the July retail sales report is set for Friday.
    Canadian government bond yields were higher across the curve
in sympathy with U.S. Treasuries. The 10-year             was up
nearly 1 basis point at 0.563%.
    Canada will announce on Tuesday that it is going ahead with
a threat to slap retaliatory tariffs on U.S. goods, a Canadian
television network said on Monday.                     

 (Reporting by Fergal Smith
Editing by Nick Zieminski)
  
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