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CANADA FX DEBT-C$ rebounds from 6-week ahead of potential further fiscal support

 (Adds strategist quotes and details throughout, updates prices)
    * Canadian dollar trades near flat against the greenback
    * Loonie hits weakest intraday level since Aug. 12 at 1.3345
    * Price of U.S. oil settles 0.7% higher
    * Canadian bond yields were little changed across the curve

    By Fergal Smith
    TORONTO, Sept 22 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Tuesday, but
outperformed all the other G10 currencies as oil rebounded and
investors weighed prospects of additional spending from Canada's
government.        
    The price of oil, one of Canada's major exports, rallied
after a steep decline the day before, as analysts took the view
that renewed lockdown restrictions would have only a limited
impact on fuel demand. U.S. crude        oil futures settled
0.7% higher at $39.60 a barrel.             
    "We've seen the Canadian dollar track oil prices especially
closely over the last few days, and the stabilization in crude
today seems to be helping the loonie," said Erik Nelson, a
currency strategist at Wells Fargo.
    Hopes for more fiscal stimulus may also be supporting the
currency, Nelson said.
    Canadian Prime Minister Justin Trudeau is scheduled to
unveil on Wednesday what he says is a far-reaching plan to help
Canada recover from the pandemic.
    Further government spending could reduce the economy's
dependence on low interest rates. But economists say that Bank
of Canada Governor Tiff Macklem is likely signing up for
inflation running above target, as he seeks an economic recovery
that raises prospects for everyone.             
    The Canadian dollar        was trading nearly unchanged at
1.3305 to the greenback, or 75.16 U.S. cents, having touched its
weakest intraday level since Aug. 12 at 1.3345.
    The U.S. dollar rose to an eight-week high against a basket
of major currencies, after a top Fed official struck a hawkish
tone and said further quantitative easing may not provide
additional lift to the U.S. economy.                     
    Canadian government bond yields were little changed across
the yield curve, with the 10-year             trading at 0.556%.

 (Reporting by Fergal Smith
Editing by Paul Simao and Jonathan Oatis)
  
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