Market News

(Adds strategist quotes and details throughout, updates prices)
    * Canadian dollar strengthens 0.9% against the greenback
    * Canadian new home prices rise 0.6% in June from May
    * Price of U.S. oil settles 4.6% higher
    * Canadian bond yields rise across a steeper curve

    By Fergal Smith
    TORONTO, July 21 (Reuters) - The commodity-linked Canadian
dollar on Wednesday strengthened to its highest in nearly a week
against its U.S. counterpart, benefiting from investor optimism
that rising COVID-19 cases in some parts of the world would not
derail economic recovery.
    Wall Street and the price of oil, one of Canada's major
exports, rose for a second day as investors bet that an earlier
flight to safety sparked by fears about the spread of the Delta
coronavirus variant was overdone.                         
    U.S. crude futures        settled 4.6% higher at $70.30 a
barrel, while the safe-haven U.S. dollar        lost ground
against a basket of major currencies.
    "Risk sentiment has dramatically reversed and is now looking
pretty upbeat and that's really denting demand for the (U.S.)
dollar," said Edward Moya, a senior market analyst at OANDA in
New York. "In this environment, commodity currencies are going
to shine."
    The Canadian dollar        was trading 0.9% higher at 1.2566
to the greenback, or 79.58 U.S. cents, after touching its
strongest level since last Thursday at 1.2521. On Monday, it hit
a five-month low at 1.2807.
    Canada's national statistics agency revealed new weights for
the basket of goods and services in the Consumer Price Index
(CPI), with shifts including a higher weighting for the shelter
component as housing prices soar.             
    Canadian new home prices rose 0.6% in June from May, the
smallest increase in six months, data from Statistics Canada
showed. The annual increase was 11.9%.
    Canadian government bond yields were higher across a steeper
curve, tracking the move in U.S. Treasuries. The 10-year
            rose 4.3 basis points to 1.222%, after touching on
Monday its lowest intraday level in five months at 1.097%.

 (Reporting by Fergal Smith; Editing by Andrea Ricci and Grant
McCool)