CANADA FX DEBT-C$ slides on potential dialing back of U.S. economic recovery

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar weakens 0.6% against the greenback
    * Loonie touches a 2-week high intraday at 1.3487
    * Price of U.S. oil falls 3.1%
    * Canadian bond yields ease across much of a flatter curve

    By Fergal Smith
    TORONTO, July 9 (Reuters) - The Canadian dollar weakened
against the greenback on Thursday as investors grew more worried
that economic recovery in the United States, Canada's largest
trading partner by far, could be pushed back by rising cases of
    The loonie        was trading 0.6% lower at 1.3589 to the
greenback, or 73.59 U.S. cents. Earlier in the day, the currency
touched its strongest intraday level in more than two weeks at
    "This (decline) is not unwarranted from our standpoint,"
said Simon Harvey, FX market analyst for Monex Europe and Monex
Canada. "We definitely believe that trading at 1.35, the loonie
was too strong given its current economic fundamentals."
    U.S. stock indexes dropped as fears of another lockdown to
contain a surge in coronavirus cases overshadowed data pointing
to a declining trend in weekly jobless claims.             
    "There's a negative risk associated with the Canadian
economy because U.S. COVID cases rising potentially prolongs the
U.S. recovery," Harvey said.
    Canada sends about 75% of its exports to the United States,
including oil. U.S. crude oil futures        settled 3.1% lower
at $39.62 a barrel.            
    Still, data showed that Canadian housing starts climbed by
8.3% in June, adding to evidence of a rebound in the domestic
economy. On Wednesday, Ottawa released a "fiscal snapshot"
showing a larger-than-expected expansion in federal government
spending to help bridge the downturn caused by COVID-19
    Canada's jobs report for June is due on Friday, which could
help guide expectations for further stimulus measures from the
Bank of Canada. The central bank is due to make an interest rate
announcement and present updated economic projections next week.
    Canadian government bond yields were lower across much of a
flatter curve, with the 10-year             down 4.4 basis
points at 0.533%.

 (Reporting by Fergal Smith; Editing by Nick Zieminski and Peter

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