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CANADA FX DEBT-Canadian dollar rallies on higher oil prices, U.S. stimulus hopes

 (Adds strategist quotes and details throughout, updates prices)
    * Canadian dollar rises 0.4% against the greenback
    * Loonie touches its strongest since Sept. 21 at 1.3198
    * Canadian housing starts fall 20% in September  
    * Canadian bond yields ease across much of the curve

    By Fergal Smith
    TORONTO, Oct 8 (Reuters) - The Canadian dollar rose to a
more-than two-week high against the greenback on Thursday as
higher oil prices and the potential for U.S. stimulus offset
comments from Bank of Canada Governor Tiff Macklem, leaving
negative interest rates on the table.
    U.S. stocks climbed as President Donald Trump fueled hopes
of fresh fiscal aid, while the price of oil, one of Canada's
major exports settled 3.1% higher at $41.19 a barrel on support
from output shutdowns ahead of a storm in the U.S. Gulf of
Mexico.                         
    "The market is coming to terms with an era of easy money
from central banks and governments and it's undoubtedly
beneficial to a commodity exporter," such as Canada, said Adam
Button, chief currency analyst at ForexLive.
    "Hopes for American stimulus and the rise in oil prices has
overshadowed Macklem's cryptic comment on negative rates,"
Button added.
    The Bank of Canada is not actively discussing negative
interest rates but they are a tool the bank could use in case it
needs to do more to tackle economic challenges caused by the
coronavirus outbreak, Governor Tiff Macklem said. "Never say
never," he said.             
    The Canadian dollar        was trading 0.4% higher at 1.3201
to the greenback, or 75.75 U.S. cents. The currency touched its
strongest intraday level since Sept. 21 at 1.3198.
    Canadian housing starts fell by more than expected in
September, tumbling 20% to 208,980 units from a revised 261,547
units in August, data from the Canadian Mortgage and Housing
Corporation showed.             
    Canada's jobs report for September is due on Friday.    
    Canadian government bond yields eased across much of the
curve in sympathy with U.S. Treasuries on Thursday. The 10-year
            fell 1.2 basis points to 0.612%, pulling back from
an earlier five-week high at 0.639%.

 (Reporting by Fergal Smith; Editing by Steve Orlofsky and
Alistair Bell)
  
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