* Canadian dollar at C$1.3031, or 76.74 U.S. cents
* Canadian wholesale trade falls 0.8 percent in June
* Price of U.S. oil rises 1.5 percent
* Bond prices lower across steeper yield curve
By Fergal Smith
TORONTO, Aug 21 (Reuters) - The Canadian dollar strengthened to a nearly two-week high against its U.S. counterpart on Tuesday, as higher oil prices and a broad decline for the greenback offset domestic data showing a surprise drop in June wholesale trade.
Canadian wholesale trade decreased by 0.8 percent in June from May, the second decline in three months, led by weaker sales in the motor vehicles and parts subsector, Statistics Canada said. Economists in a Reuters poll had forecast a 0.8 percent rise. data could weigh on prospects for further strength in Canada's economy after an expected acceleration in second quarter growth.
"It is a sign that momentum might be tailing off to end the quarter," Royce Mendes, a senior economist at CIBC Capital Markets, said in a research note.
The price of oil, one of Canada's major exports, was boosted by the prospect of lower oil supply from Iran due to U.S. sanctions. U.S. crude CLc1 prices were up 1.5 percent at $67.4 a barrel. U.S. dollar .DXY weakened against a basket of major currencies after U.S. President Donald Trump criticized the head of the Federal Reserve for raising interest rates. 8:58 a.m. EDT (1258 GMT), the Canadian dollar CAD=D4 was trading 0.1 percent higher at C$1.3031 to the greenback, or 76.74 U.S. cents.
The currency, which was boosted on Friday by domestic data showing the highest level of inflation in nearly seven years, touched its strongest since August 9 at C$1.3015.
Canadian retail sales data for June is due on Wednesday, which could help guide expectations for further interest rate hikes from the Bank of Canada. BOCWATCH
Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries. The two-year CA2YT=RR fell 0.5 Canadian cents to yield 2.104 percent and the 10-year CA10YT=RR declined 12 Canadian cents to yield 2.266 percent.