(Adds strategist quote and details throughout; updates prices) * Canadian dollar strengthens 0.1% against greenback * Touches strongest level since July 6 at 1.2312 * Price of U.S. oil settles 0.6% higher * Canadian bond yields rise across much of a steeper curve By Fergal Smith TORONTO, Oct 19 (Reuters) - The Canadian dollar rose to its highest level in more than three months against its broadly weaker U.S. counterpart on Tuesday, before giving up some gains as investors took profits ahead of a key Canadian inflation report on Wednesday. The loonie was trading 0.1% higher at 1.2363 to the greenback, or 80.89 U.S. cents, after touching its strongest intraday level since July 6 at 1.2312. "Everything is aligned for Canadian dollar strength at the moment but today"s price action reflects a bit of profit taking," said Adam Button, chief currency analyst at ForexLive. Wall Street rose as investors appeared to bet on solid quarterly reports, while the safe-haven U.S. dollar fell against a basket of major currencies. The price of oil, one of Canada"s major exports, settled 0.6% higher at $82.96 a barrel as an energy supply crunch continued across the globe, while falling temperatures in China revived concerns over whether the world"s biggest energy consumer can meet domestic heating needs. Canada"s inflation report for September is due on Wednesday, which could offer clues on the Bank of Canada policy outlook. Investors see a risk that above-target inflation could contribute to faster-than-expected interest rate hikes from the central bank. Canadian government bond yields were higher across much of a steeper curve, with the 10-year up 3.6 basis points at 1.628%. The gap between Canadian and U.S. 2-year yields widened by 3 basis points to 44.3 basis points in favor of the Canadian bond, its widest gap since January 2015. (Reporting by Fergal Smith; Editing by Paul Simao and Andrea Ricci) Our Standards: The Thomson Reuters Trust Principles.