(Adds strategist quotes and details throughout, updates prices) * Canadian dollar dips 0.2% against the greenback * Loonie trades in a range of 1.2500 to 1.2533 * Price of U.S. oil settles 0.2% lower * Canadian 10-year yield eases half a basis point to 1.256% By Fergal Smith TORONTO, Aug 12 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Thursday, as data suggesting U.S. inflation pressures remain strong raised pressure on the Federal Reserve to reduce economic stimulus and investors braced for a Canadian federal election. The U.S. dollar advanced against a basket of currencies after data showed producer prices posting their largest annual increase in more than a decade in July. Investors remain vigilant for any signs of inflation running too hot since it could spur the Fed to pull forward the tapering of asset purchases. "Fed policy, I think that"s the key driver right now," said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC. "People are thinking that the Fed is more hawkish." Adding to pressure on the loonie, the price of oil, one of Canada"s major exports, settled 0.2% lower at $69.09 a barrel, after the International Energy Agency said the spread of the Delta variant of the coronavirus would slow the recovery of global oil demand. The Canadian dollar was trading 0.2% lower at 1.2525 to the greenback, or 79.84 U.S. cents, after trading in a range of 1.2500 to 1.2533. Canadian Prime Minister Justin Trudeau is planning to call a snap election for Sept. 20, Reuters reported. Investors are looking for signs that Canada"s next government could dial back historic levels of fiscal spending to support the economy during the pandemic, with activity already on track to make a full recovery. "I think (Canadian) policymakers, both the government and the central bank are more confident in the recovery, especially given the strength of the U.S. economy," Chandler said. Canadian government bond yields were little changed across the curve, with the 10-year easing half a basis point to 1.256%. On Wednesday, it touched its highest level in four weeks at 1.295%. (Reporting by Fergal Smith; Editing by Chizu Nomiyama and Peter Cooney)