* Canadian dollar rises 0.1% against the greenback * Loonie touches its strongest level since Jan. 8 at 1.2994 * Price of U.S. oil increases 1.1% * Canadian bond yields rise across much of the curve TORONTO, Sept 1 (Reuters) - The Canadian dollar strengthened to a near eight-month high against its U.S. counterpart on Tuesday as the price of oil, one of Canada's major exports, rose and the prospect of an extended period of low interest rates weighed on the greenback. The U.S. dollar fell against a basket of major currencies as investors bet that a move by the Federal Reserve to a policy of average inflation targeting would lead to interest rates staying lower for longer. U.S. crude oil futures were up 1.1% at $43.06 a barrel as data in China and Europe showed manufacturing demand rebounding from coronavirus-induced lows. The Canadian dollar was trading 0.1% higher at 1.3032 to the greenback, or 76.73 U.S. cents. The currency touched its strongest intraday level since Jan. 8 at 1.2994. In August, the loonie notched its biggest monthly advance since June 2019, ending 2.8% higher. It was the fifth straight month the loonie has gained ground, which is its longest winning streak since 2014. Canada's statistical agency is paying close attention to the "pot of cash" that Canadians have saved up amid the COVID-19 pandemic as it looks to understand who is saving and how that money may contribute to the shape of the economic recovery. Clues as to the strength of the recovery could also come from Canada's jobs report for August, which is due on Friday. Canadian government bond yields were higher across much of the curve on Tuesday, with the 10-year up 1.6 basis points at 0.640%. Last Friday, the 10-year yield touched its highest intraday in nearly three months at 0.697%. (Reporting by Fergal Smith; editing by Jonathan Oatis)
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