* Canadian dollar at C$1.2540, or 79.74 U.S. cents
* Bond prices lower across the yield curve
TORONTO, Jan 2 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Tuesday, the first trading day of 2018, as the greenback broadly fell and the price of oil held near its highest in 2-1/2 years.
The U.S. dollar .DXY retreated against a basket of major currencies as data showing a faster pace of euro zone manufacturing activity boosted the euro. price of oil, one of Canada's major exports, touched its highest intraday since mid-2015 amid large anti-government rallies in Iran and ongoing supply cuts led by OPEC and Russia. crude CLc1 prices were little changed at $60.40 a barrel.
At 9:29 a.m. ET (1429 GMT), the Canadian dollar CAD=D4 was trading at C$1.2540 to the greenback, or 79.74 U.S. cents, up 0.3 percent from Friday's close.
The currency traded in a narrow range of C$1.2521 to C$1.2557.
On Friday, the loonie touched its strongest intraday level in more than two months at C$1.2515, helped by recent domestic data which showed an acceleration in inflation and strength in retail sales. The currency ended 2017 with a gain of nearly 7 percent.
Still, speculators have cut bullish bets on the Canadian dollar to the lowest since July, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed on Friday. As of Dec. 26, net long positions had fallen to 17,346 contracts from 45,901 a week earlier.
Canadian government bond prices were lower across the yield curve, with the two-year CA2YT=RR down 1.5 Canadian cents to yield 1.694 percent and the 10-year CA10YT=RR falling 14 Canadian cents to yield 2.06 percent.
The 10-year yield touched its highest intraday since Oct. 25 at 2.068 percent.
Canada's employment report for December and November trade data is due on Friday.