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* Canadian dollar at C$1.2990, or 76.98 U.S. cents * U.S. oil prices rise 0.4 percent * Bond prices lower across the yield curve TORONTO, May 30 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Wednesday, boosted ahead of a Bank of Canada interest rate decision by higher oil prices and broader declines for the greenback. The price of oil, one of Canada's major exports, was supported by tight supplies despite expectations OPEC and its allies will pump more in the second half of 2018 and helped by forecasts U.S. inventories fell. U.S. crude prices were up 0.40 percent at $67.00 a barrel. The U.S. dollar fell after reports that Italy's biggest party would make a renewed attempt to form a coalition government and end months of political turmoil helped the euro recover some recent lost ground. The Bank of Canada probably will hold interest rates steady as indebted consumers and uncertain trade policy necessitate caution, a Reuters poll predicted. The central bank's interest rate announcement is due at 10 a.m. EDT (1400 GMT). At 9:08 a.m. EDT (1308 GMT), the Canadian dollar was trading 0.2 percent higher at C$1.2990 to the greenback, or 76.98 U.S. cents. The currency traded in a range of C$1.2950 to C$1.3040. On Tuesday it touched its weakest in more than two months at C$1.3047. Canada's current account deficit widened to C$19.50 billion in the first quarter, the third largest ever, thanks to a growing international trade gap in goods, Statistics Canada said. In separate data, Canadian producer prices rose by 0.5 percent in April from March, the fourth consecutive increase, on higher prices for energy and petroleum products. Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries. The two-year fell 7 Canadian cents to yield 1.883 percent and the 10-year declined 50 Canadian cents to yield 2.247 percent. On Tuesday, the 10-year yield touched its lowest since April 11 at 2.165 percent. (Reporting by Fergal Smith Editing by Bill Trott)

SOURCE: REUTERS

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