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CANADA FX DEBT-Canadian dollar gains stall as U.S. inflation heats up

    * Canadian dollar strengthens 0.1% against the greenback
    * Loonie trades in a range of 1.2436 to 1.2478
    * Price of U.S. oil falls 1.4%
    * Canadian 2-year yield touches its highest since March 2020

    TORONTO, Oct 13 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Wednesday but gains were capped
ahead of a 2-month high that was notched the day before, as oil
prices fell and investors weighed data showing a faster rate of
U.S. inflation.
    The loonie        was trading 0.1% higher at 1.2454 to the
greenback, or 80.30 U.S. cents, after trading in a range of
1.2436 to 1.2478.
    On Tuesday, the currency touched its strongest level since
July 30 at 1.2430 as the gap widened between Canadian and U.S.
bond yields.  
    U.S. consumer prices increased solidly in September and are
poised to rise further in the months ahead amid a surge in the
costs of energy products, which would cast doubts on the Federal
Reserve's view that high inflation is transitory.             
    The U.S. dollar        held close to a one-year high against
a basket of peer currencies amid rising expectations the Fed
will announce a tapering of stimulus next month.             
    The price of oil, one of Canada's major exports, fell as
expectations grew that oil demand growth will fall as inflation
and supply chain issues strain major economies. U.S. crude oil
futures        were down 1.4% at $79.55 a barrel.
    Meanwhile, the United States will lift restrictions at its
land borders with Canada and Mexico for fully vaccinated foreign
nationals in early November which could relieve some economic
pressures. Curbs on non-essential travelers have been in place
since March 2020 to address the COVID-19 pandemic.             
    Canadian government bond yields were higher across the
curve, tracking the move in U.S. Treasuries. The 2-year
           touched its highest since March 2020 at 0.802% before
dipping to 0.779%, up 3.2 basis points on the day.
    The gap between it and its U.S. equivalent widened 1 basis
point to nearly 41 basis points, its widest since January 2015.

 (Reporting by Fergal Smith; Editing by Andrea Ricci)
  
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