* Canadian dollar rises 0.2% against the greenback
* Price of U.S. oil increases 0.4%
* Canadian bond prices fall across the yield curve
* Canada-U.S. 2-year spread hit its narrowest since January 2018
TORONTO, July 8 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Monday, with the currency moving closer to last week's eight-month high ahead of an interest rate decision on Wednesday from the Bank of Canada.
At 9:05 a.m. (1305 GMT), the Canadian dollar CAD=D4 was trading 0.2% higher at 1.3054 to the greenback, or 76.60 U.S. cents. The currency, which on Thursday touched its strongest since Oct. 25, last year at 1.3038, traded in a range of 1.3050 to 1.3083.
The gain for the loonie came after Canada's employment report on Friday showed that wages jumped in June by the most in more than a year - a sign of strength analysts said ruled out the chances of the Bank of Canada cutting interest rates this week. central bank will keep its key interest rate on hold at 1.75% through to the end of next year at least, according to a Reuters poll, diverging from expected easing from the U.S. Federal Reserve. government bond prices were lower across a flatter yield curve on Monday, with the two-year CA2YT=RR down 5 Canadian cents to yield 1.651% and the 10-year CA10YT=RR falling 3 Canadian cents to yield 1.574%.
The gap between Canada's 2-year yield and its U.S. counterpart narrowed by 4.4 basis points to a spread of 20.7 basis points in favor of the U.S. bond, its smallest gap since January 2018.
The price of oil, one of Canada's major exports, was supported by tensions over Iran's nuclear program but gains were tempered by global economic growth concerns. U.S. crude oil futures CLc1 rose 0.4% to $57.71 a barrel.