(Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar strengthens 0.3% against the greenback
    * Loonie touches its strongest level since February 2018 at
1.2278
    * Price of U.S. oil settles 1.8% higher
    * Canadian bond yields rise across a steeper curve
    By Fergal Smith
    TORONTO, April 29 (Reuters) - The Canadian dollar
strengthened to a three-year high against its U.S. counterpart
on Thursday as oil prices climbed and investors adjusted to more
hawkish messaging from the Bank of Canada compared to the
Federal Reserve.
    The loonie        was trading 0.3% higher at 1.2280 to the
greenback, or 81.43 U.S. cents, extending a string of gains
since last Friday and the biggest gain among G10 currencies.
    It touched its strongest level since February 2018 at
1.2278.
    Reaction to central bank guidance and higher oil prices are
"two forces really working in favor of the Canadian dollar for
now," said Bipan Rai, North America head of FX strategy at CIBC
Capital Markets.
    Rai expects the currency to strengthen further to the 1.2050
area in the near term but was less bullish on its longer term
outlook.
    The Bank of Canada last week signaled it could start hiking
rates from record lows in late 2022 and cut the pace of its bond
purchases.             
    Canada's GDP report for February is due on Tuesday which
could offer further clues on the central bank's policy outlook.
    In contrast, the Federal Reserve on Wednesday said it was
too early to consider rolling back emergency support for the
economy, pressuring the U.S. dollar       .
    The price of oil       , one of Canada's major exports,
settled 1.8% higher at $65.01 a barrel as strong U.S. economic
data offset concerns about the impact of higher COVID-19 cases
in Brazil and India.             
    Canadian government bond yields were higher across a steeper
curve. The 10-year             touched its highest since March
30 at 1.611% before dipping to 1.572%, up 3.9 basis points on
the day.
 (Reporting by Fergal Smith, Editing by Nick Zieminski and Chizu
Nomiyama)
  

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