(Adds economist quote and details throughout; updates prices) * Canadian dollar rises 0.2% against the greenback * Bank of Canada leaves key interest rate at 0.25% * Price of U.S. oil increases 0.2% * Canadian 10-year yield hits a near 3-month low By Fergal Smith TORONTO, June 9 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Wednesday, as U.S. bond yields fell and the Bank of Canada"s economic outlook supported expectations for further dialing back of stimulus in the coming quarter. The Bank of Canada left unchanged its key interest rate at a record low 0.25% and the pace of its quantitative easing, as expected. It said the economy would "rebound strongly" as vaccinations against COVID-19 picked up. "A further taper in QE is likely in July as the growth outlook improves further and becomes more certain," said Ryan Brecht, a senior economist at Action Economics. In April, the BoC became the first major central bank to cut back on pandemic-era money-printing stimulus programs. In contrast, investors bet that the Federal Reserve is some way off tapering its stimulus, weighing on U.S. bond yields and the U.S. dollar . The Canadian dollar was trading 0.2% higher at 1.2086 to the greenback, or 82.74 U.S. cents, having traded in a range of 1.2058 to 1.2117. Last week, it touched a six-year high at 1.2007, bolstered by soaring commodity prices. The price of oil, one of Canada"s major exports, was boosted on Wednesday by signs of strong fuel demand in Western economies and fading prospects of Iranian supplies returning. U.S. crude prices rose 0.2% to $70.36 a barrel. Canadian government bond yields were lower across a flatter curve, tracking the move in U.S. Treasuries. The 10-year fell as much as 5 basis points to 1.403%, its lowest level since March 11. (Reporting by Fergal Smith; Editing by Will Dunham and Jonathan Oatis) Our Standards: The Thomson Reuters Trust Principles.