* Canadian dollar strengthens 0.2% against the greenback

* Trades in a range of 1.4156 to 1.4210

* Price of oil increases 5.2%

* Bond yields move higher across the curve

By Fergal Smith

TORONTO, July 8 (Reuters) - The commodity-linked Canadian

dollar strengthened against its U.S. counterpart on Wednesday as

oil prices jumped and investors raised bets on a Bank of Canada

interest rate hike this year.

The loonie was trading 0.2% higher at 1.4170 per U.S.

dollar, or 70.57 U.S. cents, after moving in a range of 1.4156

to 1.4210.

"The CAD has performed relatively well through the overnight

volatility," Shaun Osborne and Eric Theoret, strategists at

Scotiabank, said in a note. "Negative CAD sentiment is

moderating but spot remains quite elevated."

The price of oil, one of Canada's major exports, rose

5.2% to $74.10 a barrel after U.S. President Donald Trump said

an interim agreement to end the war with Iran was "over" and

that the United States was likely to launch new strikes on

Wednesday night.

Stock markets globally fell as the jump in oil prices stoked

worries about the inflation outlook and the prospect of tighter

monetary policy.

Investors see a roughly 60% chance the BoC will raise

interest rates this year, up from 40% on Tuesday, swap market

data showed..

In the options market, three-month USD-CAD risk reversals

were trading at an implied volatility of 0.14

percentage points in favor of calls over puts, marking the

lowest premium for the greenback since June 3.

"The declining premium for USD calls suggests markets have

taken the early July USMCA developments in their stride and

might point to some modest upside potential in the CAD," the

strategists said.

Last week, the U.S. declined to extend the United

States-Mexico-Canada Agreement, seeking changes to the trade

deal.

Canadian bond yields moved higher across the curve. The

10-year was up as much as 9.5 basis points at

3.590%, its highest level since May 21.