CANADA FX DEBT-C$ posts 6-week high, boosted by trade optimism

 (Adds strategist quotes and details on market activity; updates
    * Canadian dollar at C$1.3035, or 76.72 U.S. cents
    * Loonie touches strongest level since June 14 at C$1.3025
    * Bond prices lower across yield curve
    * Canada-U.S. 2-year spread hits narrowest since July 9

    By Fergal Smith
    TORONTO, July 25 (Reuters) - The Canadian dollar
strengthened to a nearly six-week high against its U.S.
counterpart on Wednesday as the greenback broadly fell and
policymakers said they were optimistic about prospects for the
North American Free Trade Agreement.
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading 0.9 percent higher at C$1.3035 to the greenback, or
76.72 U.S. cents.
    The currency, which has been supported in recent days by
stronger-than-expected domestic data, touched its strongest
since June 14 at C$1.3025.  
    Canadian Foreign Minister Chrystia Freeland and Mexican
Economy Minister Ildefonso Guajardo said they remained
optimistic about the progress of the negotiations to revamp the
24-year-old NAFTA trade pact.             
    "It has been a trade-driven day for FX," said Eric Theoret,
currency strategist at Scotiabank. "It is very much a headline-
and sentiment-driven market."
    The U.S. dollar weakened against a basket of major
currencies after U.S. President Donald Trump secured concessions
from the European Union to avoid a trade war, the Wall Street
Journal said, citing an EU official.             
    Global stocks extended their rally into a fourth consecutive
day amid investor optimism over corporate earnings and trade.
    Canada runs a current account deficit, so its economy could
be hurt if the flow of trade or capital slows.
    The price of oil, one of Canada's major exports, rose for a
second day after data showed U.S. crude inventories fell more
than expected. U.S. crude oil futures        settled 1.1 percent
higher at $69.30 a barrel.             
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 9.5 Canadian cents to
yield 2.051 percent and the 10-year             falling 52
Canadian cents to yield 2.285 percent.
    The gap between Canada's 2-year yield and its U.S.
counterpart narrowed by 2.9 basis points to a spread of -62.0
basis points, its narrowest since July 9.

 (Reporting by Fergal Smith; editing by Jonathan Oatis)