* Canadian dollar strengthens 0.2% against greenback * Canadian factory sales decrease by 2.1% in April * Price of U.S. oil rises 0.9% * Canadian 10-year yield rises 1.3 basis points to 1.381% By Fergal Smith TORONTO, June 14 (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Monday as oil prices climbed and investors looked past domestic data showing factory sales falling in April, with the loonie clawing back some of Friday"s decline. Canadian factory sales decreased by 2.1% in April from March, Statistics Canada said. Still, sales were up 1.1% after excluding vehicles and parts. "Zooming out from the disruptions seen in the auto industry, the outlook for manufacturing sales is not all that bad," Omar Abdelrahman, an economist at TD Economics, said in a note. "The reopening of provincial economies and strength in Canada"s largest export market (the U.S.) should provide a lift to demand," Abdelrahman added. The price of oil, one of Canada"s major exports, was supported by economic recovery. U.S. crude prices rose 0.9% to $71.56 a barrel, while the Canadian dollar was trading 0.2% higher at 1.2143 to the greenback, or 82.35 U.S. cents. On Friday, it fell to its weakest since May 14 at 1.2177. Speculators have cut their bullish bets on the Canadian dollar, the strongest G10 currency this year, data from the U.S. Commodity Futures Trading Commission showed on Friday. As of June 8, net long positions had fallen to 45,281 contracts from 48,772 in the prior week. A stronger Canadian dollar is usually seen hurting exporters, but the nature of the global economic recovery could help firms pass on their higher costs from the currency to customers, leaving exporters in less pain than in previous cycles. Investors were awaiting a Federal Reserve policy announcement on Wednesday. Expectations that the Fed would stick to its dovish course have helped cap U.S. and Canadian bond yields. Canada"s 10-year yield touched its lowest level since March 3 at 1.365% before recovering to 1.381%, up 1.3 basis points on the day. (Reporting by Fergal Smith Editing by Bernadette Baum) Our Standards: The Thomson Reuters Trust Principles.