CANADA FX DEBT-C$ posts 3-week high as oil rises, greenback slides

(Adds analyst quote, details on trade minister's comments,
background, updates prices)
    * Canadian dollar ends at C$1.3242, or 75.52 U.S. cents
    * Loonie touches its strongest since Dec. 14 at C$1.3192.
    * Bond prices higher across the yield curve

    By Fergal Smith
    TORONTO, Jan 5 (Reuters) - The Canadian dollar strengthened
to a three-week high against its U.S. counterpart on Thursday as
oil prices rose and the greenback lost ground against a basket
of major currencies.
    The U.S. dollar fell to a three-week low after U.S.
inflation and unemployment data failed to reverse a downtrend
that followed some of the biggest gains on record for China's
    Prices of oil, one of Canada's major exports, were lifted by
news that Saudi Arabia had cut production to meet OPEC's
agreement to reduce output. 
    U.S. crude prices settled 50 cents higher at $53.76 a
    "This latest bout of Canadian dollar strength has everything
to do with oil and not enough to do with the softness that we
have seen in domestic data," said Bipan Rai, senior macro
strategist at CIBC Capital Markets.
    Recent data showed that Canada's economy contracted in
October and that the Bank of Canada's new measures of core
inflation declined in November.
    The Canadian dollar ended at C$1.3242 to the
greenback, or 75.52 U.S. cents, stronger than Wednesday's close
of C$1.3308, or 75.14 U.S. cents.
    The currency's weakest level of the session was C$1.3312,
while it touched its strongest since Dec. 14 at C$1.3192.
    The move follows a 3 percent gain for the currency in 2016,
its first annual advance since 2012, as oil rebounded from its
February trough.
    There is no question of separating the Canadian and U.S.
economies, Canadian Trade Minister Chrystia Freeland said when
asked about the potential impact of a Donald Trump presidency.
    Canadian government bond prices were higher across the yield
curve, with the two-year up 6.5 Canadian cents to
yield 0.72 percent and the 10-year rising 38
Canadian cents to yield 1.666 percent.
    The gap between Canada's 10-year yield and its U.S.
equivalent narrowed by 5.6 basis points to -68.5 basis points,
as U.S. Treasuries outperformed amid uncertainty about the
incoming Trump administration. 
    Canadian producer prices rose 0.3 percent in November from
October on higher prices for motorized and recreational vehicles
and primary non-ferrous metal products. 
    Canada's trade report for November and employment report for
December are due on Friday. 

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli and
James Dalgleish)