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CANADA FX DEBT-C$ hits 2-month high on easing U.S. inflation pressures

    (Adds analyst quotes and details throughout; updates prices)
    * Canadian dollar strengthens 0.9% against the greenback
    * Touches its strongest since June 10 at 1.2752
    * Price of U.S. oil settles 1.6% higher
    * Canadian bond yields fall across curve

    By Fergal Smith
    TORONTO, Aug 10 (Reuters) - The Canadian dollar on Wednesday
notched its biggest gain in nearly three months against a
broadly weaker U.S. counterpart, as investors reacted to data
showing an easing of U.S. inflation pressures.
    The loonie        was trading 0.9% higher at 1.2775 to the
greenback, or 78.28 U.S. cents, its biggest advance since May
13. It touched its strongest intraday level since June 10 at
1.2752.
    "Markets are all moving on the same theme today, and that's
U.S. CPI coming in below expectations," said Jay Zhao-Murray,
market analyst at Monex Canada Inc. "The (U.S.) dollar sold off
as traders piled back into riskier currencies."
    The U.S. dollar tumbled against a basket of major currencies
and Wall Street rallied as U.S. consumer prices rose at a slower
than expected annual pace in July, leading to reduced bets of a
super-sized interest rate hike by the Federal Reserve next
month.
    Investors have worried that a rapid pace of central bank
tightening could derail global economic activity. Canada is a
major exporter of commodities, including oil, so the loonie
tends to be sensitive to the outlook for growth.
    U.S. crude oil futures        settled 1.6% higher at $91.93
a barrel, bolstered by the move into riskier assets and
encouraging figures on U.S. gasoline demand.
    Canadian government bond yields eased across the curve,
tracking moves in U.S. Treasury yields.
    The 2-year            was down 7.5 basis points at 3.197%,
while the 10-year fell 2.3 basis points to 2.679%.

 (Reporting by Fergal Smith; Editing by Elaine Hardcastle and
John Stonestreet)

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