CANADA FX DEBT-C$ nears 7-month high; market awaits policy clues from new finance minister

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar rises 0.5% against the greenback
    * Loonie touches its strongest since Jan. 27 at 1.3147
    * Chrystia Freeland becomes Canada's new finance minister
    * Canadian bond yields ease across the curve

    By Fergal Smith
    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 the potential impact on policy of the new
finance minister.
    Canadian Prime Minister Justin Trudeau appointed his close
ally and deputy Chrystia Freeland as the country's finance
minister amid plans to outline a revamped agenda and coronavirus
pandemic recovery plan.                         
    Freeland replaces Bill Morneau who resigned on Monday amid
friction with Trudeau.
    "The market is in a wait-and-see mode until it gets a hint
of how Freeland plans to operate," said Adam Button, chief
currency analyst at ForexLive.
    "Right now the market is more focused on the growth paradigm
... if Freeland is looser (with fiscal policy) it will be
CAD-positive," Button said. 
    Canada's budget deficit is forecast to hit C$343.2 billion
this fiscal year. At about 16% of gross domestic product, it
will be the largest shortfall since World War Two.
    The Canadian dollar        was trading 0.5% higher at 1.3154
to the greenback, or 76.02 U.S. cents. The currency notched its
strongest intraday level since Jan. 27 at 1.3147.
    The U.S. dollar index        fell to its lowest level in
more than two years, as the ongoing effects of the Federal
Reserve's stimulus programs weakened the dollar broadly for the
fifth consecutive day and lifted U.S. stock indexes to record
    The price of oil, one of Canada's major exports, steadied as
demand fears tied to the new coronavirus offset high compliance
with supply cuts from the OPEC+ producer group. U.S. crude
       futures settled at an unchanged level of $42.89 a barrel.
    Canadian government bond yields eased across the curve in
sympathy with U.S. Treasuries, with the 10-year             down
2.2 basis points at 0.562%. Last Thursday, it notched a
two-month high at 0.642%.

 (Reporting by Fergal Smith; Editing by Steve Orlofsky and Paul