* Canadian dollar at C$1.2564, or 79.59 U.S. cents
* Bond prices lower across the yield curve
TORONTO, April 18 (Reuters) - The Canadian dollar steadied against its U.S. counterpart on Wednesday after notching an eight-week high the day before, as investors turned their attention to the Bank of Canada's interest rate announcement.
The central bank, which is expected to leave its benchmark interest rate on hold at 1.25 percent on Wednesday, will also release its updated economic projections. The announcement is due at 10:00 a.m. EDT (1400 GMT). BOCWATCH
An uncertain outlook for trade has been one of a number of issues that has worried the central bank since it last raised rates in January. But prospects of a deal to revamp the North American Free Trade Agreement have improved recently.
The top U.S., Canadian and Mexican officials driving NAFTA renegotiations will meet in Washington on Thursday, a Canadian government source said on Tuesday, as pressure for a quick deal mounted. 8:40 a.m. EDT (1240 GMT), the Canadian dollar CAD=D4 was trading 0.1 percent lower at C$1.2564 to the greenback, or 79.59 U.S. cents.
The currency traded in a range of C$1.2548 to C$1.2598. On Tuesday, it touched its strongest level in nearly two months at C$1.2528.
The Canadian dollar is on course to strengthen in April for the eighth time in the last 10 years, a sequence strategists link to seasonal vitality in stocks and energy products, rewarding investors who trade on market patterns. price of oil, one of Canada's major exports, was lifted by a reported decline in U.S. crude inventories and the risk of supply disruptions. crude CLc1 prices were up 1.8 percent at $67.69 a barrel, while U.S. stock futures rose after the latest batch of results including Wall Street bank Morgan Stanley (NYSE:MS) MS.N added to optimism about the U.S. corporate reporting season. nL3N1RV4HR
Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year bond CA2YT=RR fell 3.5 Canadian cents to yield 1.905 percent and the 10-year bond CA10YT=RR declined 20 Canadian cents to yield 2.272 percent.
On Monday, the 10-year bond yield touched its highest level in nearly four weeks at 2.292 percent.