CANADA FX DEBT-C$ rises vs weaker greenback ahead of potential rate hike

    * Canadian dollar at C$1.2428, or 80.46 U.S. cents
    * Loonie touches its strongest since Tuesday at C$1.2405
    * Bond prices higher across the yield curve

    TORONTO, Jan 15 (Reuters) - The Canadian dollar strengthened
to a nearly one-week high against its U.S. counterpart on Monday
as the greenback broadly fell and investors braced for a
potential interest rate increase by the Bank of Canada this
    The central bank will kick off 2018 by hiking interest
rates, buoyed by robust job growth, even as uncertainty around
the fate of the North American Free Trade Agreement lingers, a
Reuters poll found.             
    Chances of a rate hike on Wednesday stand at nearly 90
percent, the overnight index swaps market indicated.           
    The U.S. dollar        fell against a basket of major
currencies as growing economic optimism in the euro zone and
expectations that the European Central Bank will tighten
monetary policy helped boost the euro.             
    At 9:18 a.m. EST (1418 GMT), the Canadian dollar         
was trading at C$1.2428 to the greenback, or 80.46 U.S. cents,
up 0.2 percent.
    The currency touched its strongest since Tuesday at
    Speculators have raised bullish bets on the Canadian dollar
for the first time in three weeks, data from the U.S. Commodity
Futures Trading Commission and Reuters calculations showed on
Friday. As of Jan. 9, net long positions had increased to 17,461
contracts from 14,739 a week earlier.                 
    Lending to Canadian small businesses perked up in November
after declining for the past six months on gains in the
construction and transportation sectors, which could bode well
for economic momentum heading into the end of 2017, data showed.
    Resales of Canadian homes rose 4.5 percent in December from
November, the fifth straight monthly rise, likely because
activity was pulled forward to avoid mortgage rule changes that
hit in January, the Canadian Real Estate Association said on
    The price of oil, one of Canada's major exports, hovered
near a three-year high on signs that production cuts by OPEC and
Russia are tightening supplies.             
    U.S. crude        prices were up 0.14 percent at $64.39 a
    Canadian government bond prices were higher across the yield
 curve, with the two-year            up 0.5 Canadian cent to
yield 1.757 percent and the 10-year             rising 7
Canadian cents to yield 2.167 percent.    

 (Reporting by Fergal Smith; Editing by Nick Zieminski)