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Canadian dollar gains 0.7% against the greenback

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Touches its strongest since June 17 at 1.3619

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Price of oil settles 0.5% higher

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Bond yields ease across the curve

By Fergal Smith

TORONTO, June 26 (Reuters) - The Canadian dollar

strengthened to a nine-day high against its U.S. counterpart on

Thursday as the greenback posted broad-based declines and ahead

of domestic GDP data that could help guide expectations for

additional easing from the Bank of Canada.

The U.S. dollar fell to a three-year low against a

basket of major currencies after a report that U.S. President

Donald Trump had toyed with the idea of selecting and announcing

Federal Reserve Chair Jerome Powell's replacement by September

or October undermined faith in the soundness of the country's

monetary policy.

Investors also weighed U.S. gross domestic product data that

showed the economy shrinking at a downwardly revised annualized

rate of 0.5% in the first quarter.

"It's simply a USD move today on the softer U.S. GDP

revision along with the Shadow Fed Chair story," said Amo

Sahota, director at Klarity FX in San Francisco. "I think trend

traders will want to see how Canadian GDP turns out tomorrow. If

it's strong then it looks like we are heading to a fresh USD-CAD

low for the year."

The Canadian dollar was trading 0.7% higher at 1.3625

per U.S. dollar, or 73.39 U.S. cents, after touching its

strongest intraday level since June 17 at 1.3619. It was the

currency's biggest advance since May 23.

Canada's GDP report for April, due on Friday, is expected to

show no change in the level of activity from March. Preliminary

data on Thursday showed that wholesale trade fell 0.4% on a

monthly basis in May, adding to recent evidence of a slowdown in

the Canadian economy.

Investors see a nearly 40% chance of the Bank of Canada

resuming its easing campaign at the next policy decision on July

30.

The price of oil, one of Canada's major exports,

settled 0.5% higher at $65.24 a barrel, while Canadian bond

yields moved lower across the curve, tracking moves in U.S.

Treasuries.

The 10-year was down 3.8 basis points at 3.323%.