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CANADA FX DEBT-C$ rebounds from one-week low as bets rise on Fed rate cut

Levent Uslu

(Adds dealer quote and details throughout, updates prices)

* Canadian dollar rises 0.1% against the greenback

* Loonie hits an eight-day low intraday at 1.3096

* Canadian home prices rise 0.8% in June from May

* Canada's 10-year yield hits a near two-week low at 1.495%

TORONTO, July 18 (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Thursday, with the currency recovering from an earlier eight-day low as the greenback was pressured by heightened bets that the Federal Reserve would lower interest rates at the end of July. At 4:13 p.m. EDT (2013 GMT), the Canadian dollar was trading 0.1% higher at 1.3037 to the greenback, or 76.70 U.S. cents. The currency's strongest level of the session was 1.3029, while it touched its weakest since July 10 at 1.3096. The U.S. dollar declined against a basket of major

currencies after New York Federal Reserve President John

Williams said policymakers need to add stimulus early to address too-low inflation when U.S. interest rates are near zero and said they cannot wait for economic disaster to unfold. The Fed most often moves rates in 25-basis-point increments, but some market players expect the central bank to cut by as much as 50 basis points later this month. "If the Fed goes by 50, I think you see USD-CAD break below the bottom end of the range that it has been in, which would see it down below 1.30," said Scott Lampard, head of global markets at HSBC Bank Canada. The loonie notched last Friday a near nine-month high at 1.3018, boosted by expected divergence in policy between the Bank of Canada and the Fed. Canada's central bank last week made clear it had no intention of easing rates. Meanwhile, Canadian home prices rose 0.8% in June from the prior month, thanks to a seasonal boost, but the increase was lower than the month's 21-year average, data showed.

A separate report from ADP, a human resources solutions company, showed that Canada added 30,400 jobs in June, as hiring rebounded after a sharp decline in May. Canada's retail sales report for May is due on Friday. The price of oil, one of Canada's major exports, was pressured by expectations that crude output would rise in the Gulf of Mexico following last week's hurricane in the region.

U.S. crude oil futures settled 2.6% lower at $55.30 a

barrel. Canadian government bond prices were higher across the yield

curve, with the two-year up 6.3 Canadian cents toyield 1.453% and the 10-year rising 29 Canadian

cents to yield 1.497%. The 10-year yield touched its lowest intraday since July 5 at 1.495%.

(Reporting by Levent Uslu, additional reporting by Fergal Smith; editing by G Crosse)