* Canadian dollar at C$1.2764, or 78.35 U.S. cents
* Loonie touches three-week high at C$1.2730
* Canadian jobs fall 1,100 in April
* Bond prices higher across steeper yield curve
By Fergal Smith
TORONTO, May 11 (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Friday, with the currency pulling back from an earlier three-week high after domestic jobs data tempered expectations for a Bank of Canada interest rate hike this month.
The decline of 1,100 jobs in April was well short of economists' forecasts for an increase of 17,400. But full-time jobs rose by nearly 29,000 and wage growth accelerated. think it will shave the currency a little bit," said Doug Porter, chief economist at BMO Capital Markets. "Going into this report, the market had a strong probability of the Bank of Canada raising interest rates in May and I think this is going to cool some of that speculation."
Chances of a Bank of Canada interest rate hike at the May 30 announcement slipped to 39 percent from nearly 50 percent before the jobs data, the overnight index swaps market indicated. BOCWATCH
At 9:12 a.m. EDT (1312 GMT), the Canadian dollar CAD=D4 was trading nearly unchanged at C$1.2764 to the greenback, or 78.35 U.S. cents. The currency touched its strongest since April 20 at C$1.2730.
The loonie is expected to strengthen over the coming year as a clearer outlook for the North American Free Trade Agreement opens the door to more Bank of Canada interest rate hikes, a Reuters poll of currency strategists showed. House Speaker Paul Ryan has set a May 17 deadline to be notified of a new NAFTA trade deal to give the current Congress a chance of passing it, while Mexico's top trade official on Thursday said time was running short to meet such a deadline. price of oil, one of Canada's major exports, steadied near 3-1/2 year highs as the prospect of new U.S. sanctions on Iran tightened the outlook for Middle East supply. crude CLc1 prices were down 0.2 percent at $71.19 a barrel.
Canadian government bond prices were higher across a steeper yield curve, with the two-year CA2YT=RR up 5 Canadian cents to yield 1.951 percent and the 10-year CA10YT=RR rising 12 Canadian cents to yield 2.382 percent.
The 10-year yield had touched its highest intraday since May 2014 at 2.417 percent.