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C$ climbs to 3-week high as BoC eyes soft landing



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Canadian dollar gains 0.3% against the greenback

Touches its strongest since June 4 at 1.3651

Price of U.S. oil settles 1.1% higher

Canadian bond yields trade mixed across the curve

By Fergal Smith

TORONTO, June 24 (Reuters) -The Canadian dollar strengthened to a near three-week high against its U.S. counterpart on Monday as investors took stock of recent broad-based gains for the greenback and the Bank of Canada said the economy could grow as inflation cools.

The loonie CAD= was trading 0.3% higher at 1.3651 to the U.S. dollar, or 73.25 U.S. cents, its strongest level since June 4.

"We are seeing a little bit of position squaring," said Michael Goshko, senior market analyst at Convera Canada. "Traders are very long of U.S. dollars."

The U.S. dollar .DXY pulled back from a seven-week against a basket of major currencies, while the price of oil, one of Canada's major exports, settled 1.1% higher at $81.63 a barrel.

There isenough slack in the Canadian labor market to allow for growth and the creation of more jobs even as the inflation rate continues to decline, said Bank of Canada Governor Tiff Macklem.

"Governor Macklem believes that a soft landing is still in the cards," Tiago Figueiredo, a macro strategist at Desjardins, said in a note.

Canada's consumer price index report, due on Tuesday, is expected to show inflation easing to an annual rate of 2.6% in May from 2.7% in April.

Data in line with expectations could make a rate cut next month "a virtual certainty," Convera Canada's Goshko said.

Investors see a 72% chance that the BoC would cut interest rates further at the next policy decision on July 24, swaps market data shows. 0#BOCWATCH

Earlier this month, the BoC became the first G7 central bank to ease policy, cutting its benchmark rate by 25 basis points to 4.75%.

Canadian government bond yields were mixed across a more deeply inverted curve. The 2-year CA2YT=RR was up 1.8 basis points at 3.941%.



Reporting by Fergal Smith
Editing by Marguerita Choy

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