CORRECTED-CANADA FX DEBT-C$ rallies, lifted by oil and Fed chief's remarks

 (Corrects headline to remove "expeced Bank of Canada rate
    * Canadian dollar rises 0.4% against the greenback
    * Price of U.S. oil increases 2.2%
    * Canada-U.S. 2-year spread narrows by 5.1 basis points

    TORONTO, July 10 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Wednesday,
recovering from a one-week low the day before, as oil prices
rose and after comments by Federal Reserve Chairman Jerome
Powell weighed on the greenback.
    At 8:55 a.m. (1255 GMT), the Canadian dollar          was
trading 0.4% higher at 1.3077 to the greenback, or 76.47 U.S.
cents. The currency, which on Tuesday touched its weakest level
since July 1 at 1.3141, traded in a range of 1.3077 to 1.3137.
    The gain for the loonie came ahead of an interest rate
decision by the Bank of Canada at 10 a.m. ET (1400 GMT). 
    The central bank looks set to raise its second-quarter
economic growth forecast and leave its benchmark interest rate
unchanged at 1.75%, taking a different tack from some major
peers, such as the Fed, which are signaling plans for additional
    In prepared remarks to a congressional committee, Fed's
Powell said concerns about trade policy and a weak global
economy "continue to weigh on the U.S. economic outlook." and
the Fed stands ready to "act as appropriate" to sustain a
decade-long expansion.             
    Meanwhile, the price of oil, one of Canada's major exports,
was boosted by industry data showing U.S. inventories fell more
than expected, while major U.S. producers evacuated rigs in the
Gulf of Mexico before a storm. U.S. crude oil futures       
were up 2.2% at $59.12 a barrel.             
    Canadian government bond prices were mixed across the yield
curve, with the two-year            flat to yield 1.642 percent
and the benchmark 10-year             falling 7 Canadian cents
to yield 1.592%.
    The gap between Canada's 2-year yield and its U.S.
counterpart narrowed by 5.1 basis points to a spread of 21.2
basis points in favor of the U.S. bond, nearly its smallest gap
since January 2018.

 (Reporting by Fergal Smith; Editing by David Gregorio)