(Adds analyst quotes and details throughout; updates prices) * Loonie touches its strongest since February 2018 at 1.2312 * Canadian retail sales rise 4.8% in February * Price of U.S. oil settles 1.5% higher * Canadian bond yields ease across the curve By Fergal Smith TORONTO, April 28 (Reuters) - The Canadian dollar rose against the greenback on Wednesday as investors cheered domestic retail sales data and the Federal Reserve stuck to its dovish stance, trailing the Bank of Canada on moves to reduce emergency support for the economy. The loonie was trading 0.6% higher at 1.2315 to the greenback, or 81.20 U.S. cents, having touched its strongest intraday level since February 2018 at 1.2312. "The stars are aligned for the Canadian dollar," said Adam Button, chief currency analyst at ForexLive. "It is clear that the Bank of Canada is a step ahead of the Federal Reserve and maybe two steps ahead in terms of normalizing policy." The Fed held interest rates and its monthly bond-buying program steady, nodding to the U.S. economy"s growing strength but giving no sign it was ready to reduce its support for the recovery. In contrast, the Bank of Canada signaled last week it could start hiking rates from their record lows in late 2022 and cut the pace of its bond purchases. Other factors supportive of the Canadian dollar include higher commodity prices and an improved outlook for the domestic economy, say analysts. Canadian retail sales rose 4.8% in February from January, surpassing estimates of a 4% gain, on higher sales at motor vehicle and parts dealers, as well as gasoline stations, data from Statistics Canada showed. "Today"s retail sales number underscored that Canadians are itching to spend money in the post-pandemic period, whenever it comes," Button said. Oil, , one of Canada"s major exports, settled 1.5% higher at $63.86 a barrel after U.S. distillate inventories posted a large drawdown and refiners ramped up activity to the highest in over a year. Canadian government bond yields eased across the curve, tracking the move in Treasury yields. The 10-year fell 2.2 basis points to 1.537%. (Reporting by Fergal Smith; Editing by Bernadette Baum and Peter Cooney)