CANADA FX DEBT-C$ retreats from near 4-week high on 'dovish hike' prospects

 (Adds strategist quote, details on activity, updates prices)
    * Canadian dollar at C$1.3113, or 72.26 U.S. cents
    * Loonie touches its strongest since June 14 at C$1.3066
    * Bond prices lower across the yield curve
    * 2-year yield touches highest since June 13 at 1.947

    By Fergal Smith
    TORONTO, July 9 (Reuters) - The Canadian dollar weakened
against the greenback on Monday, pulling back from a nearly
four-week high, as investors weighed whether cautious language
might accompany an expected Bank of Canada interest rate hike
this week.    
    The Bank of Canada will hike interest rates on Wednesday as
strong job growth and rising inflation pressures override
concerns about a deepening trade rift with the United States, a
Reuters poll found.             
    Money markets see a roughly 90 percent chance of a rate
increase. Bets for a hike were boosted by domestic data on
Friday showing a stronger-than-expected jobs gain.
    "I think the Bank of Canada will increase interest rates
this week, but there is a danger it's ... a dovish hike while
there is still uncertainty around trade," said Amo Sahota,
director at Klarity FX in San Francisco.
    A "dovish hike" is a rate increase accompanied by guidance
from the central bank that reduces expectations for additional
    Canada is engaged in a trade feud with the United States and
is also in slow-moving talks with the United States and Mexico
to revamp the North American Free Trade Agreement.
    At 3:15 p.m. (1915 GMT), the Canadian dollar          was
trading 0.2 percent lower at C$1.3113 to the greenback, or 72.26
U.S. cents.
    The currency earlier touched its strongest intraday level
since June 14 at C$1.3066.    
    The price of oil was supported by increased global demand
and U.S. efforts to shut out Iranian output using sanctions.
U.S. crude oil futures        settled 0.1 percent higher at
$73.85 a barrel.                 
    The U.S. dollar        recovered from its lowest point in
more than three weeks to edge higher against a basket of major
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 6 Canadian cents to
yield 1.945 percent and the 10-year             falling 33
Canadian cents to yield 2.167 percent.
    The two-year yield touched its highest intraday since June
13 at 1.947 percent.

 (Reporting by Fergal Smith; Editing by Nick Zieminski and Peter