(Adds strategist quotes and details throughout, updates prices) * Canadian dollar strengthens 0.4% against the greenback * Price of U.S. oil settles 0.3% lower * Canadian bond yields ease across a flatter curve By Fergal Smith TORONTO, April 8 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Thursday, recovering from a one-week low the day before, as the level of oil prices bolstered the medium-term outlook for the currency and ahead of domestic jobs data on Friday. The Canadian dollar was trading 0.4% higher at 1.2560 to the greenback, or 79.62 U.S. cents. On Wednesday, it touched its weakest intraday level since March 31 at 1.2634. "We have seen partial retracement from the decline over the last couple of days," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets. "With oil prices where they are - let"s call WCS still at roughly $49 a barrel - I still think CAD has room to strengthen over the medium term and even over a one-week horizon." Western Canadian Select (WCS), the heavy blend of oil that Canada produces, trades at a discount to the U.S. benchmark. U.S. crude futures settled 0.3% lower at $59.60 a barrel, but were up nearly 80% since last November. The S&P 500 closed at a record high as Treasury yields fell following softer-than-anticipated labor market data, while the U.S. dollar fell to a two-week low against a basket of major currencies. Canada"s employment report for March, due on Friday, could offer clues on the Bank of Canada"s policy outlook. The central bank has become more upbeat about prospects for economic growth, while some strategists expect it to cut bond purchases at its next interest rate announcement on April 21. On a more cautious note for the economy, Ontario, Canada"s most populous province, initiated a four-week stay-at-home order as it battles a third wave of the COVID-19 pandemic. Canadian government bond yields were lower across a flatter curve in sympathy with U.S. Treasuries. The 10-year fell 3.3 basis points to 1.469%. (Reporting by Fergal Smith; Editing by Alison Williams and Jonathan Oatis)