Canadian dollar snaps losing streak as oil prices jump

Canadian dollar snaps losing streak as oil prices jump

* Canadian dollar strengthens 0.7% against the greenback

* Rebounds after hitting weakest intraday since July 15 at 1.3063

* Price of U.S. oil settles 3.7% higher

* 10-year yield touches a one-month high

By Fergal Smith

TORONTO, Aug 23 (Reuters) - The Canadian dollar strengthened against the greenback on Tuesday, recovering from its lowest level in nearly six weeks, as oil prices rose and investors weighed U.S. economic data that could reduce expected tightening by the Federal Reserve.

The loonie CAD= was trading 0.7% higher at 1.2960 to the greenback, or 77.16 U.S. cents, after four straight days of declines. Earlier, the currency touched its weakest level since July 15 at 1.3063.

"We have seen the Canadian dollar rally on the back of strong oil prices," said Rahim Madhavji, president at Knightsbridge Foreign Exchange.

The price of oil, one of Canada's major exports, climbed as Saudi Arabia floated the idea of OPEC+ output cuts to support prices.

U.S. crude oil futures CLc1 settled 3.7% higher at $93.74 a barrel, while the U.S. dollar .DXY pulled back from a fresh two-decade high against the euro after a report showed U.S. private sector activity contracted for a second-straight month in August.

The data "is going to put lesser pressure than would have been otherwise on the Fed to keep doing outsized rate hikes," Madhavji said.

Fed Chair Jerome Powell is due to speak at the Jackson Hole economic symposium in Wyoming on Friday.

Canadian government bond yields were higher across the curve. The 10-year CA10YT=RR touched its highest since July 21 at 3.086% before dipping to 3.047%, up 3.1 basis points on the day.

In domestic news, Germany hopes Canadian liquefied natural gas will help ease its shift away from Russian gas imports, Chancellor Olaf Scholz said, a day after Canada played down the economic viability and speed of setting up new export terminals.
Reporting by Fergal Smith; Editing by Susan Fenton and Alison Williams