* Canadian dollar at C$1.3035, or 76.72 U.S. cents
* Loonie touches strongest level since June 14 at C$1.3025
* Bond prices lower across yield curve
* Canada-U.S. 2-year spread hits narrowest since July 9
By Fergal Smith
TORONTO, July 25 (Reuters) - The Canadian dollar strengthened to a nearly six-week high against its U.S. counterpart on Wednesday as the greenback broadly fell and policymakers said they were optimistic about prospects for the North American Free Trade Agreement.
At 4 p.m. EDT (2000 GMT), the Canadian dollar CAD=D4 was trading 0.9 percent higher at C$1.3035 to the greenback, or 76.72 U.S. cents.
The currency, which has been supported in recent days by stronger-than-expected domestic data, touched its strongest since June 14 at C$1.3025.
Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo said they remained optimistic about the progress of the negotiations to revamp the 24-year-old NAFTA trade pact. has been a trade-driven day for FX," said Eric Theoret, currency strategist at Scotiabank. "It is very much a headline- and sentiment-driven market."
The U.S. dollar weakened against a basket of major currencies after U.S. President Donald Trump secured concessions from the European Union to avoid a trade war, the Wall Street Journal said, citing an EU official. stocks extended their rally into a fourth consecutive day amid investor optimism over corporate earnings and trade. runs a current account deficit, so its economy could be hurt if the flow of trade or capital slows.
The price of oil, one of Canada's major exports, rose for a second day after data showed U.S. crude inventories fell more than expected. U.S. crude oil futures CLc1 settled 1.1 percent higher at $69.30 a barrel. government bond prices were lower across the yield curve, with the two-year CA2YT=RR down 9.5 Canadian cents to yield 2.051 percent and the 10-year CA10YT=RR falling 52 Canadian cents to yield 2.285 percent.
The gap between Canada's 2-year yield and its U.S. counterpart narrowed by 2.9 basis points to a spread of -62.0 basis points, its narrowest since July 9.