Canadian dollar hits more than 3-month high as greenback slides
* Canadian dollar strengthens 0.2% against greenback
* Touches strongest level since July 6 at 1.2312
* Price of U.S. oil increases 0.7%
* Canadian bond yields rise across much of a steeper curve
By Fergal Smith
TORONTO, Oct 19 (Reuters) - The Canadian dollar strengthened to its highest level in more than three months against its U.S. counterpart on Tuesday as oil prices rose and the greenback broadly lost ground.
The U.S. dollar .DXY retreated to a three-week low, hit by a proliferation of interest rate-hike bets in other markets.
"The USD is under attack across the board with gains mostly coming from the commodity FX bloc," Bipan Rai, North America head of FX strategy at CIBC Capital Markets, said in a note.
Canada is a major producer of commodities, including oil.
U.S. crude CLc1 prices were up 0.7% at $82.99 a barrel as a supply crunch in natural gas, electricity and coal continued across the globe, while falling temperatures in China revived concerns over whether the world's biggest energy consumer can meet domestic demand for heating.
Other commodity-linked currencies, such as the Australian dollar AUD= , New Zealand dollar NZD= and the Norwegian crown NOK= , also gained ground.
The Canadian dollar CAD= was trading 0.2% higher at 1.2354 to the greenback, or 80.95 U.S. cents, after touching its strongest level since July 6 at 1.2312.
Gains for the loonie came after a Bank of Canada survey on Monday showed that companies anticipate stronger demand as the COVID-19 pandemic fades.
The survey "likely added to CAD strength, perhaps as businesses expect to raise prices going forward," strategists at Action Economics said in a note.
Investors see a risk that above-target inflation could contribute to faster-than-expected interest rate hikes from the Bank of Canada. BOCWATCH
Canada's inflation report for September is due on Wednesday.
Canadian government bond yields were higher across much of a steeper curve, with the 10-year CA10YT=RR up 2.9 basis points at 1.621%. It touched 1.683% last week, which was its highest since January of 2020.
Reporting by Fergal Smith Editing by Paul Simao
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