CANADA FX DEBT-Loonie rises to 14-month high, yearly gain tops G10 currencies

 (Adds strategist quote and details throughout; updates prices)
    * Canadian dollar rises 0.7% against the greenback
    * Loonie notches 14-month high at 1.2952, up 5.1% for the
    * Price of U.S. oil falls 1%
    * Canadian bond prices fall across a steeper yield curve

    By Fergal Smith
    TORONTO, Dec 31 (Reuters) - The Canadian dollar rose to a
14-month high against its U.S. counterpart on Tuesday as
year-end funding pressures that might have boosted the greenback
didn't occur, pushing the loonie's annual rally to more than 5%,
the biggest of any G10 currency.
    The Federal Reserve appeared to have averted a squeeze on
bank funding over the crucial year-end period, as large banks
took only a small portion of the $150 billion of overnight
liquidity on offer and the cost of borrowing was muted.
    "For whatever reason CAD has run out ahead of the pack and I
think that has to do with year-end liquidity pressures" that
didn't materialize, said Greg Anderson, global head of foreign
exchange strategy at BMO Capital Markets in New York.
    The U.S. dollar        weakened against most major
currencies, with its biggest declines coming against sterling
       and the Canadian dollar.
    At 2:31 p.m. (1931 GMT), the Canadian dollar          was
trading 0.7% higher at 1.2978 to the greenback, or 77.05 U.S.
cents. The currency notched its strongest intraday level since
Oct. 17, 2018 at 1.2952.
    The gain for the loonie coincided with U.S. President Donald
Trump saying that the so-called Phase 1 of a trade deal with
China would be signed on Jan. 15 at the White House, though
considerable confusion remains about the details of the
    Canada is a major exporter of commodities, including oil, so
its economy could benefit from an improved outlook for global
    The loonie has advanced 5.1% this year but it has slumped
nearly 19% since the start of the decade, hit when oil prices
plunged in 2014.
    U.S. crude oil futures        fell 1% on Tuesday to $61.04 a
barrel but were on track for monthly and annual gains, supported
by a thaw in the prolonged U.S.-China trade row and Middle East
    Canadian government bond prices were lower across a steeper
yield curve, with the two-year            down 4 Canadian cents
to yield 1.699% and the 10-year             falling 57 Canadian
cents to yield 1.704%.
    The 10-year yield has fallen about 26 basis points since the
start of 2019.

 (Reporting by Fergal Smith; Editing by David Gregorio and Grant