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CANADA FX DEBT-Canadian dollar rises with oil; 10-year yield hits a 2-month high

    * Canadian dollar gains 0.3% against the greenback
    * Loonie trades in a range of 1.3259 to 1.3346
    * Price of U.S. oil increases 2.1%
    * Canadian bond yields rise across a steeper curve

    TORONTO, Aug 12 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Wednesday as oil prices rose and
investors weighed prospects of U.S. economic stimulus, while
Canada's 10-year yield climbed to its highest in more than two
months.
    The loonie        was trading 0.3% higher at 1.3266 to the
greenback, or 75.38 U.S. cents. The currency, which one week ago
notched a five-month high at 1.3229, traded in a range of 1.3259
to 1.3346.
    U.S. stock index futures rose following a pullback on Wall
Street in the previous session, with investors remaining on edge
due to a stalemate over the next coronavirus federal aid bill.
            
    Canada runs a current account deficit and is a major
exporter of commodities, including oil, so the loonie tends to
be sensitive to the global flow of trade and capital.
    U.S. crude        prices were up 2.1% at $42.47 a barrel
after an industry report showed U.S. crude inventories last week
fell more than analysts had expected, bolstering hopes that fuel
demand in the world's biggest economy can weather the
coronavirus pandemic.             
    Canadian government bond yields were higher across a steeper
curve ahead of the largest-ever auction of U.S. 10-year notes.
The Canadian 10-year yield             rose 4 basis points to
0.617%, having touched its highest intraday level since June 11
at 0.621%.
    Canada's manufacturing sales report for June is due on
Friday.

 (Reporting by Fergal Smith; Editing by Steve Orlofsky)
  
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