CANADA FX DEBT-C$ posts 7-month high as investors weigh replacement of finance minister

    * Canadian dollar rises 0.4% against the greenback
    * Loonie touches its strongest since Jan. 27 at 1.3148
    * Price of U.S. oil decreases 0.3%
    * Canadian bond yields were little changed across the curve

    TORONTO, Aug 18 (Reuters) - The Canadian dollar strengthened
to its highest level in nearly seven months against its U.S.
counterpart on Tuesday as the greenback broadly declined and
investors weighed reports of who will replace Bill Morneau as
Canada's finance minister.
    Canadian Prime Minister Justin Trudeau will tap Deputy Prime
Minister Chrystia Freeland, a former journalist and his most
trusted ally, to be his new finance minister after Morneau
resigned on Monday, Canadian media reported.                 
    Canada's budget deficit is forecast to hit C$343.2 billion
this fiscal year. At about 16% of gross domestic product, it is
the largest shortfall since World War Two.
    The Canadian dollar        was trading 0.4% higher at 1.3156
to the greenback, or 76.01 U.S. cents. The currency notched its
strongest intraday level since Jan. 27 at 1.3148.
    The U.S. dollar        fell against a basket of other major
currencies for a fifth consecutive trading day, approaching its
lowest level in two years under pressure from low yields and
bleak economic data in the United States.             
    The price of oil, one of Canada's major exports, dipped but
hung on to most of its gains from the previous session when it
was supported by high compliance with production cuts from
members of the OPEC+ producer group. U.S. crude        prices
were down 0.3% at $42.76 a barrel.              
    Canadian government bond yields were little changed across
the curve in sympathy with U.S. Treasuries, with the 10-year
            holding at about 0.580%. Last Thursday, it notched a
two-month high at 0.642%.
    Canada's inflation report for July is due on Wednesday.

 (Reporting by Fergal Smith; Editing by Steve Orlofsky)