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CANADA FX DEBT-C$ rebounds from 3-week low as BoC forgoes additional easing steps

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar rises 0.6% against the greenback
    * BoC holds its key interest rate steady at 0.25% 
    * U.S. oil settles 3.5% higher
    * Canada's 10-year yield rises 2.7 basis points to 0.593%

    By Fergal Smith
    TORONTO, Sept 9 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Wednesday as oil and stock
prices rallied and the Bank of Canada stopped short of
additional stimulus measures, with the loonie rebounding from a
three-week low.
    The Canadian dollar        was trading 0.6% higher at 1.3153
to the greenback, or 76.03 U.S. cents. The currency hit its
weakest intraday level since Aug. 17 at 1.3259.
    Wall Street's main indexes rallied to stanch the bleeding
after a three-day drop as investors jumped back in to take
advantage of the repricing in technology-related stocks, while
U.S. crude oil        settled 3.5% higher at $38.05 a barrel.
    Oil, one of Canada's major exports, clawed back some of the
losses it sustained in the previous session.
    "The main drivers of Canadian dollar strength today are the
large bounces in equity markets and oil," said Adam Button,
chief currency analyst at ForexLive.
    A lack of new policy initiatives from Canada's central bank
was also supportive of the loonie, contrasting with the recent
shift by the Federal Reserve to average inflation targeting,
Button said. "The market is sensing that the Bank of Canada has
reached its limit on easing."
    The BoC held its key interest rate steady at 0.25% but left
the door open on possible future changes to its bond-buying
program. It said that the third-quarter rebound was looking to
be faster than anticipated but the economy will continue to
require extraordinary support as it moves to a recuperation
phase.             
    Canadian housing starts rose 6.9% in August to notch a
13-year high.             
    "All the low-hanging fruit has basically been harvested and
now it's virus dependent and a slow grind," said Darcy Briggs, a
portfolio manager at Franklin Templeton Canada.                 
      
    Canada's 10-year yield             rose 2.7 basis points to
0.593% along with higher U.S. Treasury yields.

 (Reporting by Fergal Smith; editing by Jonathan Oatis, Steve
Orlofsky and Dan Grebler)
  
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