* Canadian dollar climbs 0.8 percent against the greenback
* Canada reaches deal with United States to revamp NAFTA
* Price of U.S. oil rises 2.8 percent
* Canada's 10-year yield touches 4-month high at 2.519 percent
By Fergal Smith
TORONTO, Oct 1 (Reuters) - The Canadian dollar strengthened to a four-month high against its U.S. counterpart on Monday, boosted by a last-minute deal to salvage the trilateral NAFTA trade pact and a jump in crude oil prices.
The new United States-Mexico-Canada Agreement (USMCA) largely leaves the broad North American Free Trade Agreement intact and maintains supply chains that would have been fractured under weaker bilateral deals. are raising bets for as many as four additional interest rate increases from the Bank of Canada by the end of 2019 after the trade deal reduced uncertainty for Canada's trade-dependent economy. is a really good day for the loonie," said Colin Cieszynski, chief market strategist at SIA Wealth Management. "The trade agreement got settled and we are getting a boost from the oil price."
The price of oil, one of Canada's major exports, rose to levels not seen since November 2014 as U.S. sanctions on Iran loom and a NAFTA deal fosters growth. U.S. crude oil futures CLc1 settled 2.8 percent higher at $75.30 a barrel. 4:16 p.m. (2016 GMT), the Canadian dollar CAD=D4 was trading 0.8 percent higher at 1.2805 to the greenback, or 78.09 U.S. cents.
The currency, which notched on Friday its biggest gain in four months, touched its strongest level since May 22 at 1.2783.
The break below 1.2900 was "very encouraging" for loonie bulls and opened the door to further gains for the currency, Cieszynski said.
Gains for the loonie came despite data showing that Canada's manufacturing sector expanded in September at its slowest pace this year as the rise of production volumes decelerated and growth in new business was held back by global trade frictions. jobs data for September and August trade data are due on Friday.
Canadian government bond prices were lower across the yield curve, with the two-year CA2YT=RR down 13 Canadian cents to yield 2.288 percent and the 10-year CA10YT=RR falling 69 Canadian cents to yield 2.51 percent.
The 10-year yield touched its highest intraday since May 18 at 2.519 percent.