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* Canadian dollar at C$1.2464, or 80.23 U.S. cents
* Bond prices lower across a steeper yield curve
* 10-year yield touches a three-year high at 2.205 percent
* U.S. crude oil futures settle nearly 2 percent higher
By Fergal Smith
TORONTO, Jan 9 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Tuesday as the greenback firmed broadly and investors turned attention to a Bank of Canada interest rate decision next week.
At 5 p.m. EST (2200 GMT), the Canadian dollar CAD=D4 was trading at C$1.2464 to the greenback, or 80.23 U.S. cents, down 0.4 percent. The currency traded in a range of C$1.2399 to C$1.2478.
"The move lower was just broad-based U.S. dollar strength," said Blake Jespersen, managing director, foreign exchange sales at BMO Capital Markets.
The U.S. dollar .DXY rose to an 11-day high against a basket of other major currencies, continuing a recovery from four-month lows plumbed at the start of the year. think it (the loonie) is going to be trading in a very tight range until we get to the bank announcement next Wednesday," Jespersen said. "That has turned into the main event in the Canadian market place."
The currency touched its strongest in three months at C$1.2355 on Friday after stronger-than-expected domestic jobs data prompted investors to bet on a Bank of Canada rate hike as soon as Jan. 17. BOCWATCH chances of a rate hike next week have more than doubled to 83 percent since the jobs data, the overnight index swaps market indicated. They got a further boost from a Bank of Canada business survey on Monday that showed optimism. price of oil, one of Canada's major exports, touched its highest since December 2014, supported by OPEC-led production cuts and expectations that U.S. crude inventories have dropped for an eighth week in a row. crude oil futures CLc1 settled nearly 2 percent higher at $62.96 a barrel.
Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries. The two-year CA2YT=RR fell 2.5 Canadian cents to yield 1.799 percent and the 10-year CA10YT=RR declined 39 Canadian cents to yield 2.205 percent, its highest since September 2014.
Canadian housing starts fell in December to a seasonally adjusted annual rate of 216,980 from November's downwardly revised 251,675. Economists had expected a decline to a 212,500 annual rate.