* Canadian dollar at C$1.3136, or 76.13 U.S. cents
* Bond prices higher across the yield curve
* 10-year yield touches its highest since June 23 at 1.300 pct
TORONTO, Oct 17 (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Monday, but the loonie pulled back from an earlier two-week high as oil fell and investor attention turned to the Bank of Canada interest rate decision mid-week.
U.S. crude CLc1 prices were down 1.59 percent to $49.55 a barrel as a rising rig count in the United States stoked worries of increased output. gains for the loonie came as foreign investment in Canadian securities in August rose to C$12.74 billion from C$9.10 billion in July. For the January to August period, foreign purchases of Canadian securities reached a record C$108.14 billion. Bank of Canada is expected to hold interest rates at 0.50 percent on Wednesday as it waits to see how the economic bounce-back it is anticipating in the second half of the year unfolds.
At 10:02 a.m. EDT (1402 GMT), the Canadian dollar CAD=D4 was trading at C$1.3136 to the greenback, or 76.13 U.S. cents, slightly stronger than Friday's close of C$1.3145, or 76.07 U.S. cents.
The currency's weakest level of the session was C$1.3183, while it touched its strongest since Sept. 29 at C$1.3065.
Speculators cut bearish bets on the Canadian dollar, Commodity Futures Trading Commission data showed on Friday. Net short Canadian dollar positions dipped to 11,704 contracts in the week ended Oct. 11 from 14,077 in the prior week. government bond prices were higher across the yield curve, with the two-year CA2YT=RR price up 3 Canadian cents to yield 0.606 percent and the benchmark 10-year CA10YT=RR rising 22 Canadian cents to yield 1.225 percent.
The 10-year yield touched its highest intraday since June 23 at 1.300 percent.
Canadian manufacturing workers at Fiat Chrysler Automobiles voted on Sunday to approve a tentative labor agreement with the automaker, their union said, averting a strike and clearing the way for talks with Ford Motor (NYSE:F) Co.