CANADA FX DEBT-C$ holds near 3-week high on higher stocks, rate hike bets

 (Adds strategist quotes and details on activity)
    * Canadian dollar at C$1.3133, or 76.14 U.S. cents
    * U.S. oil prices fall 1.6 percent
    * Bond prices trade mixed across the yield curve

    By Fergal Smith
    TORONTO, July 5 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Thursday, holding near its
strongest in nearly three weeks, as stocks rose and investors
braced for a potential interest rate hike next week from the
Bank of Canada.
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading 0.1 percent higher at C$1.3133 to the greenback, or
76.14 U.S. cents. The currency traded in a range of C$1.3116 to
    On Wednesday, the loonie touched its strongest since June 15
at C$1.3113. It was boosted last week by domestic data showing
business optimism and comments by Bank of Canada Governor
Stephen Poloz that left the door open to an interest rate hike
at the July 11 announcement.
    "Those have swayed the market in a more hawkish direction,"
said Alvise Marino, FX strategist at Credit Suisse in New York.
    Money markets see about a 70 percent chance of a rate hike
next week.               
     "We have seen slightly more risk-on price action which is
probably also helping (the loonie) a little bit." Marino said.
    U.S. stocks rose as reports suggested that the United States
could walk back threatened tariffs on European cars if the
European Union scrapped duties on U.S. cars in return.
    Canada runs a current account deficit so its economy could
be hurt if the flow of trade or capital slows.
    The country has its own trade dispute with the United States
and is contending with slow-moving talks to revamp the North
American Free Trade Agreement, while U.S. President Donald Trump
has threatened to impose tariffs on Canada's autos.
    The U.S. dollar        fell against a basket of major
currencies as strong German industrial orders and hopes over a
softening in U.S. trade stance boosted the euro.             
    The price of oil, one of Canada's major exports, fell after
U.S. government data showed an unexpected build in crude oil
stockpiles. U.S. crude oil futures        settled 1.6 percent
lower at $72.94 a barrel.                  
    Canadian government bond prices were mixed across the yield
curve, with the two-year            down 0.5 Canadian cent to
yield 1.916 percent and the 10-year             rising 15
Canadian cents to yield 2.146 percent.    
    Canada's employment report for June and trade data for May
are due out on Friday.

 (Reporting by Fergal Smith
Editing by Phil Berlowitz)