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CANADA FX DEBT-Positive thinking helps push C$ to two-month high

    (Adds analyst quotes and details throughout; updates prices)
    * Canadian dollar strengthens 0.1% against greenback
    * Touches strongest level since June 10 at 1.2729
    * Price of U.S. oil settles 2.6% higher
    * Canadian bond yields rise across steeper curve

    By Fergal Smith
    TORONTO, Aug 11 (Reuters) - The Canadian dollar climbed to
its highest level in more than two months against a broadly
weaker U.S. counterpart on Thursday as oil prices rose and
investors grew more optimistic about the global economic
    The loonie        was trading 0.1% higher at 1.2765 per
greenback, or 78.34 U.S. cents, after touching its strongest
level since June 10 at 1.2729.
    "The market is having a rethink of the global growth
trajectory," said Adam Button, chief currency analyst at
ForexLive. "Since the strong U.S. jobs report, the market is
starting to focus on the positives."
    Data last week showed that the U.S. economy added more jobs
than forecast in July, while signs of a peak in U.S. inflation
have fed expectations of smaller-than-anticipated Federal
Reserve interest rate hikes.
    Canada is a major producer of commodities, including oil, so
the loonie tends to be sensitive to shifts in risk appetite.
    The S&P 500 index        was trading at its highest level in
more than three months and oil settled 2.6% higher at $94.34 a
    "The positive economic sentiment is well reflected in the
oil price right now," Button said.
    Still, the loonie gained less ground than some other
commodity-linked currencies including the Australian and New
Zealand dollars
    Canada's inverted yield curve is signaling the Bank of
Canada may raise interest rates to a level that triggers a
recession, placing the central bank in a tough spot as it aims
to tame high inflation and engineer a "soft landing" for the
    Canadian government bond yields were higher across much of a
steeper curve, tracking moves in U.S. Treasuries. The 10-year
            rose 11.5 basis points to 2.790%.

 (Reporting by Fergal Smith; Editing by Paul Simao and John

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