(Adds analyst quote and details throughout, updates prices) * Canadian dollar strengthens 0.2% against the greenback * Price of U.S. oil settles 0.2% lower * Canadian bond yields rise across a steeper curve By Fergal Smith TORONTO, July 26 (Reuters) - The Canadian dollar edged higher against its broadly weaker U.S. counterpart on Monday, as a recovery in risk appetite remained intact following a recent wobble and investors looked ahead to a Federal Reserve meeting this week. The loonie was trading 0.2% higher at 1.2540 to the greenback, or 79.74 U.S. cents. It has rebounded from a 5-month low at 1.2807 last Monday, when investors were rattled by the spread of the Delta variant of the coronavirus. "The recuperation in investors" spirits should curtail the Canadian dollar"s downside potential, and at the same time put a lid on the (U.S.) dollar," analysts at Action Economics said in a note. The S&P 500 eked out another record closing high, while the safe-haven U.S. dollar fell against a basket of major currencies. Still, caution ahead the Fed interest rate decision on Wednesday kept the market in check. Oil settled 0.2% lower at $71.91 a barrel but copper climbed to a 6-week high, with floods in top consumer China sparking demand hopes at a time when inventories were falling. Canada is a major exporter of both commodities. The Canadian Consumer Price Index Report for June is set for release on Wednesday. The data will include updated weights for the basket of goods and services in the index, with shifts including a higher weighting for the shelter component as housing prices soar. Canadian government bond yields were higher across a steeper curve. The 10-year rose 1.6 basis points to 1.223%, after hitting last Tuesday a 5-month low at 1.104%. (Reporting by Fergal Smith; Editing by Andrea Ricci and Sandra Maler) Our Standards: The Thomson Reuters Trust Principles.