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CANADA FX DEBT-C$ edges higher against U.S. dollar as oil prices steady

    * Canadian dollar at C$1.3537 or 73.87 U.S. cents
    * Bond prices rise across the maturity curve

 (Updates prices, adds comment)
    By Saqib Iqbal Ahmed
    July 20 (Reuters) - The Canadian dollar rose to a four-day
high against a broadly softer U.S. dollar on Monday, as oil
prices increased modestly after shaking off worries that rising
coronavirus cases would put a curb on the demand for fuel.
    The Canadian dollar        was at C$1.3537 to the greenback,
or 73.87 U.S. cents, stronger than Friday's close of C$1.3578,
or 73.65 U.S. cents. The loonie was at its strongest against the
greenback since Thursday.
    The price of oil, one of Canada's major exports, overcame
early weakness to edge higher as a flurry of announcements about
a potential COVID-19 vaccine and ongoing talks over a European
Union fund to revive economies hit by the pandemic assuaged
concerns about a hit to demand for crude.             
    "The move lower (for the U.S. dollar) came as oil prices
recovered, and as risk-taking levels improved," said Ronald
Simpson, managing director of global currency analysis at Action
Economics.
    The U.S. dollar fell to its lowest level in more than four
months against the euro, as hopes that the European Union would
agree on a recovery fund for economies in the region hit by the
COVID-19 pandemic lifted the common currency.             
    The loonie has been in a narrow range against the greenback
for the past seven weeks, bouncing between C$1.3717 and
C$1.3313.
    "The CAD’s correlation with risk is weakening but remains
elevated while its correlation with crude is picking up,
suggesting perhaps that the market’s focus is switching to more
domestically-relevant drivers," Shaun Osborne, chief FX
strategist at Scotiabank, said in a note.
    Canadian government bond prices rose across the maturity
curve, with the two-year            yield at 0.270%, down from
0.272% late on Friday, while the benchmark Canadian 10-year
            yield fell to 0.516% from Friday's 0.525%.

 (Reporting by Saqib Iqbal Ahmed; Editing by Jonathan Oatis and
Peter Cooney)
  
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