CANADA FX DEBT-Canadian dollar holds near 3-year high as investors weigh inflation risk – Reuters

 (Adds strategist quotes and details throughout; updates prices)
    * Loonie trades in a range of 1.2585 to 1.2647
    * Price of U.S. oil rises 0.1%
    * Canada's 10-year yield touches a one-year high at 1.278%

    By Fergal Smith
    TORONTO, Feb 23 (Reuters) - The Canadian dollar was little
changed against the greenback on Tuesday, holding near its
strongest level in nearly three years as investors weighed
prospects of higher inflation and the Bank of Canada said the
rollout of vaccines would boost the economy.    
    The Canadian dollar        was trading nearly unchanged at
1.2606 to the greenback, or 79.33 U.S. cents, having traded in a
range of 1.2585 to 1.2647. On Monday, the loonie touched its
strongest intraday level since April last year at 1.2576.
    The U.S. dollar        reversed early gains after a dovish
speech from U.S. Federal Reserve chief Jerome Powell failed to
quell inflation fears.             
    "An inflationary surprise would be wildly bullish for the
Canadian dollar given the abundant resources in Canada," said
Adam Button, chief currency analyst at ForexLive.
    The price of oil, one of Canada's major exports, was trading
close to its highest in more than one year on signs that global
coronavirus restrictions were being eased. U.S. crude       
rose 0.1% to $61.75 a barrel.
    Canada's economy will have a solid rebound in coming months
as COVID-19 restrictions are loosened, and an expected ramp-up
in vaccination is boosting confidence in sustained strong growth
into 2022, Bank of Canada Governor Tiff Macklem told an Alberta
business audience.             
    Still, Button said, there were no indications in the speech
that Macklem intends "to tap the stimulus brakes any time soon."
       
    Canadian government bond yields were higher across a steeper
curve. The 10-year touched its highest since February last year
at 1.278% before dipping to 1.262%, up 3.1 basis points on the
day.

 (Reporting by Fergal Smith;
Editing by Alistair Bell and Dan Grebler)
  

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