* Canadian dollar rises 0.3% against the greenback * Price of U.S. oil increases 0.4% * Canadian 10-year yield hits a near 3-month low TORONTO, June 9 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Wednesday as oil prices rose and U.S. bond yields touched their lowest levels in a month, while investors awaited an interest rate decision from the Bank of Canada. U.S. bond yields and the U.S. dollar fell as investors bet that the Federal Reserve is some way off tapering its economic stimulus. The price of oil, one of Canada"s major exports, was boosted by signs of strong fuel demand in western economies and fading prospects of Iranian supplies returning. U.S. crude prices rose 0.4% to $70.36 a barrel, while the Canadian dollar was trading 0.4% higher at 1.2070 to the greenback, or 82.85 U.S. cents. Last week, the loonie touched a six-year high at 1.2007, bolstered by soaring commodity prices and the Bank of Canada"s more hawkish stance. The central bank"s interest rate announcement is due at 10 a.m. ET (1400 GMT). The benchmark rate is expected to be left on hold at 0.25% until the fourth quarter of 2022 but further reduction in the pace of bond purchases could happen as soon as next quarter, a Reuters poll showed. Canadian government bond yields were lower across a flatter curve, tracking the move in U.S. Treasuries. The 10-year fell as much as 3.6 basis points to 1.417%, its lowest level since March 11. (Reporting by Fergal Smith; Editing by Will Dunham) Our Standards: The Thomson Reuters Trust Principles.