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CANADA FX DEBT-C$ hits 6-week low as COVID-19 sparks 'tsunami of risk aversion'

 (Adds strategist quote and details throughout; updates prices)
    * Canadian dollar weakens 0.6% against the greenback
    * Loonie hits a 6-week low at 1.3376
    * Price of U.S. oil increases 0.3%
    * Canada's 10-year yield steadies at 0.555%

    By Fergal Smith
    TORONTO, Sept 23 (Reuters) - The Canadian dollar fell to a
six-week low against its broadly stronger U.S. counterpart on
Wednesday as investors ditched commodity-linked currencies due
to worries about rising coronavirus cases, while Ottawa promised
more economic support.
    The loonie        was trading 0.6% lower at 1.3376 to the
greenback, or 74.76 U.S. cents. The loonie touched its weakest
intraday level since Aug. 10 at 1.3381, while the safe-haven
U.S. dollar        expanded on its eight-week high.
    "A second wave of coronavirus infections in a number of
major economies has unleashed a tsunami of risk aversion," said
Karl Schamotta, chief market strategist at Cambridge Global
Payments. "Traders are selling economically sensitive currencies
like the Canadian dollar."
    Canada is a major producer of commodities, including oil, so
the loonie tends to be sensitive to the global flow of trade.
    Australia and New Zealand are also major commodity
producers. Their currencies fell by more than 1%, while shares
on Wall Street tumbled as data showing a slowdown in domestic
business activity and a stalemate in Congress over more
coronavirus relief raised fears of a choppy economic recovery
from a pandemic-driven recession.             
    Canada's Liberal government promised major new investments
and policy initiatives to help the country recover from the
coronavirus pandemic, saying "this is not the time for
austerity".                 
    Economic growth in Canada has rebounded sharply in recent
months, but the country faces a resurgence in coronavirus cases.
   
    The price of oil, one of Canada's major exports, was
supported by U.S. government data that showed crude and fuel
inventories dropped last week, although concerns about the
ongoing pandemic capped gains.
    U.S. crude oil futures        settled 0.3% higher at $39.93
a barrel, while Canadian government bond yields were little
changed across the curve, with the 10-year             trading
at 0.555%.             

 (Reporting by Fergal Smith; editing by Jonathan Oatis)
  
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