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CANADA FX DEBT-Loonie holds near 3-month high ahead of interest rate decisions

Fergal Smith

decisions@ (Adds dealer quote and details throughout; updates prices)

* Loonie touches its strongest since July 22 at 1.3050

* Price of U.S. oil decreases 1.5%

* Canadian bond prices fall across the yield curve

TORONTO, Oct 28 (Reuters) - The Canadian dollar was little changed against the greenback on Monday, holding near an earlier three-month high as investors grew optimistic on a U.S.-China trade deal and ahead of an interest rate decision this week from the Bank of Canada.

At 5 p.m. (2100 GMT), the Canadian dollar was

trading nearly unchanged at 1.3056 to the greenback, or 76.61 U.S. cents. The currency, which rose 0.5% last week, touched its strongest intraday level since July 22 at 1.3050. "I think we are going to be treading water until we get the central bank announcements now," said Amo Sahota, director at Klarity FX in San Francisco. Both the Bank of Canada and the Federal Reserve are due to make policy announcements on Wednesday. The S&P 500 hit a record high as a more civil tone between the United States and China lifted hopes for a possible trade deal and investors looked toward a Fed rate cut. Canada is a major exporter of commodities, including oil, so its economy could benefit from an improved outlook for global

trade. U.S. crude oil futures settled 1.5% lower at

$55.81 a barrel amid expectations for higher U.S. crude stockpiles. The Bank of Canada has left its benchmark interest rate on hold this year at 1.75% as the domestic economy added jobs at a robust pace and inflation stayed close to its 2% target. The central bank is expected to wait until the first quarter of next year before cutting rates, a Reuters poll showed. Canadian government bond prices were lower across the yield

curve, with the two-year down 9.5 Canadian cents toyield 1.71% and the 10-year falling 74 Canadian

cents to yield 1.619%. The 10-year yield touched its highest intraday level since July 16 at 1.628%.

(Reporting by Fergal Smith; Editing by Steve Orlofsky and Peter Cooney)