* Canadian dollar rises 0.9 percent against the greenback
* Loonie touches its strongest since Nov. 8 at 1.3119
* Currency on track to rise 3.8 percent in January
* Price of U.S. oil up 1.7 percent
* Canadian bond prices rise across much of steeper yield curve
By Fergal Smith
TORONTO, Jan 30 (Reuters) - The Canadian dollar climbed to its highest level in more than two months against its broadly weaker U.S. counterpart on Wednesday, as oil prices rose and the Federal Reserve said it would be patient in lifting borrowing costs further this year.
The U.S. dollar .DXY fell against a basket of major currencies after the Fed held interest rates steady, as expected, and struck a cautious tone in its outlook for the economy and future interest rate increases. Canadian dollar is flying high on the basis of looser global monetary conditions," said Karl Schamotta, director of global markets strategy at Cambridge Global Payments. "We are seeing a sustained risk rally around the world on the basis of a more dovish Fed than had been previously expected."
Global stocks .WORLD rose about 1.2 percent, building on gains since the start of the year.
Canada is running a current account deficit and exports many commodities, including oil, so its economy could benefit from a pickup in the global flow of capital.
The price of oil was boosted by U.S. government data that showed signs of tightening supply, as investors remained concerned about supply disruptions following U.S. sanctions on Venezuela's oil industry. U.S. crude oil futures settled 1.7 percent higher at $54.23 a barrel. 4:07 p.m. (2107 GMT), the Canadian dollar CAD=D4 was trading 0.9 percent higher at 1.3148 to the greenback, or 76.06 U.S. cents. The currency touched its strongest level intraday since Nov. 8 at 1.3119.
The loonie has climbed 3.8 percent for the month so far, the best performance of G10 currencies. It declined 7.8 percent in 2018.
Gains for the loonie came as the United States and China opened a pivotal round of high-level talks aimed at digging out from their months-long trade war. government bond prices were higher across much of a steeper yield curve in sympathy with U.S. Treasuries. The two-year CA2YT=RR rose 5.5 Canadian cents to yield 1.823 percent and the 10-year CA10YT=RR gained 15 Canadian cents to yield 1.923 percent.
The gap between Canada's two-year yield and its U.S. equivalent narrowed by 2 basis points to a spread of 69.5 basis points in favor of the U.S. bond.
Canada's gross domestic product data for November is due on Thursday. Analysts expect the data to reveal a contraction in the economy.