CANADA FX DEBT-Canadian dollar posts 3-month high amid signs of solid economic rebound

    * Canadian dollar strengthens 0.6% against the greenback
    * Touches its strongest level since July 6 at 1.2362
    * Canadian factory sales rise 0.5% in August
    * Canadian bond yields ease across much of a flatter curve

    By Fergal Smith
    TORONTO, Oct 14 (Reuters) - The Canadian dollar on Thursday
strengthened to its highest level in more than three months
against its U.S. counterpart, as oil prices rose and domestic
manufacturing data added to evidence that economic activity
picked up in the third quarter.
    Canadian factory sales rose 0.5% in August from July, on
higher sales of petroleum and coal, chemicals and primary
metals, Statistics Canada said.             
    "The broad-based increase in Canada's manufacturing sales in
August is welcome news," Omar Abdelrahman, an economist at TD
Economics, said in a note. "Canada's economy appears to be on
track to record a solid rebound in the third quarter."
    Canada's economy surprisingly shrank in the second quarter.
But data last Friday showed that Canada has added back all the
jobs it lost during the pandemic.
    The jobs data has bolstered expectations for the Bank of
Canada to further cut its bond purchase program later this
month. The central bank is due on Oct. 27 to make an interest
rate announcement and update its economic forecasts.
    The price of oil, one of Canada's major exports, rose after
the International Energy Agency said that record natural gas
prices would boost demand for oil and top oil producer Saudi
Arabia dismissed calls for additional OPEC+ supply.             
    U.S. crude        prices increased 0.5% to $80.85 a barrel,
while the Canadian dollar        was trading 0.6% higher at
1.2362 to the greenback, or 80.89 U.S. cents, its strongest
level since July 6.
    Gains for the loonie came as the U.S. dollar        gave
back some recent gains against a basket of major currencies.
    Canadian government bond yields were lower across much of a
flatter curve. The 10-year             dipped 2.2 basis points
to 1.580%, after touching on Tuesday its highest since January
2020 at 1.683%.

 (Reporting by Fergal Smith; Editing by Kirsten Donovan)