* Canadian dollar at C$1.3247, or 75.49 U.S. cents
* Bond prices mixed across yield curve
By Solarina Ho
TORONTO, June 26 (Reuters) - The Canadian dollar strengthened against the U.S. dollar on Monday as oil prices rose, and hung on to some of its gains even after the greenback rebounded from earlier weakness.
Oil prices climbed off last week's seven-month lows, but gains were capped by a relentless rise in U.S. supply and bloated global inventories. U.S. crude CLc1 prices rose 0.8 percent to $43.38 a barrel. O/R
Amo Sahota, director at Klarity FX in San Francisco, said the heavy summer driving season should help with the inventory glut.
"If they don't, I think this market is in some real trouble for oil and that's just going to keep weighing on the loonie," said Sahota. "That's going to act as a counter to what the rhetoric has been from the Bank of Canada."
Earlier this month, the central bank shifted to a more hawkish stance when its top two officials said rate cuts put in place in 2015 had largely done their work. 4 p.m. ET (2000 GMT), the Canadian dollar CAD=D4 was trading at C$1.3247 to the greenback, or 75.49 U.S. cents, up 0.2 percent.
The currency traded between C$1.3213 and C$1.3277.
The greenback .DXY weakened initially after an unexpected fall in new orders for key U.S.-made capital goods suggested a loss of momentum in the manufacturing sector halfway through the second quarter. U.S. dollar rebounded after European Central Bank chief Mario Draghi defended the ECB's monetary policy. said the market would look to Canada's monthly economic growth data on Friday for further direction, and would also watch closely for monetary policy clarity in upcoming central bank speeches.
Governor Stephen Poloz will speak in Portugal on Wednesday. The Bank will also release its business outlook report on Friday.
Speculators cut bearish bets on the Canadian dollar for a fourth straight week, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed on Friday. Canadian dollar net short positions fell to 82,881 contracts as of June 20 from 88,595 a week earlier. on Friday showing weaker-than-expected domestic inflation has reduced the chances of an interest rate hike next month from the Bank of Canada. But analysts expect policymakers to stay hawkish amid concern that rates have been low for too long. BOCWATCH government bond prices were mixed across the yield curve in sympathy with U.S. Treasuries. The two-year CA2YT=RR was down 1 Canadian cent to yield 0.903 percent and the 10-year CA10YT=RR rose 12 Canadian cents to yield 1.463 percent.