(Add quote and dealer details throughout; update pricing) * Canadian dollar rises 0.2% against greenback * Loonie is trading in a range of 1.2590 to 1.2685 * US oil price drops 1.6% * Canadian bond yields ease on flatter curve By Fergal Smith TORONTO, March 9 (Reuters) – The Canadian dollar has strengthened against its US counterpart on Tuesday, falling bond yields boosting risk appetite, while investors awaited a Bank of Canada decision on interest rates on Wednesday. The Canadian dollar was trading 0.2% higher at 1.2639 for the greenback, or 79.12 cents US, having traded in a range of 1.2590 to 1.2685. “We saw US yields pull back a bit overnight, which created a bit more confidence in the market, which helps commodity currencies,” said Darren Richardson, COO at Richardson International Currency Exchange Inc. Safe haven US dollar fell 3 -Half-month highs and global equities climbed as lower yields eased fears the economic recovery could overheat and lead inflation higher than expected. Canada has a current account deficit and is a major exporter of commodities, including oil, so the loonie tends to be sensitive to risk appetite. US crude oil futures have lost some recent gains, falling 1.6% to $ 64.01 per barrel. Oil hit its highest level since October 2018 on Monday, supported by a tight supply amid the extension of OPEC + production restrictions and growing hopes for a recovery in demand. The rise in oil supported the Canadian dollar. Since the start of the year, the loonie has gained 0.7%, just behind the pound sterling and the Norwegian krone among the G10 currencies. Investors are seeing more and more chances that the Bank of Canada will raise interest rates next year as the economic outlook improves, but the central bank is expected to push back those bets for now, indicating still unemployment high, analysts said. Canadian government bond yields fell on a flatter curve in sympathy with US Treasuries, the 10-year down 6.3 basis points to 1.461%. On Monday, it hit its highest since January 2020 at 1.545%. (Reporting by Fergal Smith; Editing by Jonathan Oatis and Peter Cooney)

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