* Canadian dollar weakens 0.4% against the greenback * Loonie trades in a range of 1.2519 to 1.2598 * Price of U.S. oil falls 1.6% * Canadian bond yields rise across a steeper curve TORONTO, Sept 7 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Tuesday as oil prices fell and U.S. Treasury yields climbed, while investors awaited a Bank of Canada interest rate decision this week. Rising U.S. Treasury yields helped the greenback gain ground against a basket of major currencies, moving away from a near-one month low hit last week, The price of oil, one of Canada"s major exports, extended losses from the previous session, as Saudi Arabia"s sharp cuts in crude contract prices for Asia sparked fears over slower demand. U.S. crude oil futures fell 1.6% to $68.20 a barrel, while the Canadian dollar was trading 0.4% lower at 1.2592 to the greenback, or 79.42 U.S. cents. The currency traded in a range of 1.2519 to 1.2598. Speculators have turned bearish on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission showed on Friday. As of Aug. 31, the market was net short 2,848 contracts on the currency, compared to net long 5,877 contracts in the prior week. The Bank of Canada is forecast to keep interest rates at a record low of 0.25% on Wednesday, according to a Reuters poll. But economists still expected the central bank to raise interest rates to 0.50% towards the end of next year, despite a surprise contraction in economic growth last quarter. Meanwhile, Canadian Liberal Prime Minister Justin Trudeau, trailing in opinion polls, attacked his main rival on Monday for waffling on gun control and vaccine mandates as the campaign enters its final stretch ahead of the Sept. 20 election. Canadian government bond yields were higher across a steeper curve on Tuesday, tracking the move in U.S. Treasuries, as the Canadian market reopened following Monday"s Labour Day holiday. The 10-year rose 4.7 basis points to 1.235%. (Reporting by Fergal Smith; Editing by Emelia Sithole-Matarise) Our Standards: The Thomson Reuters Trust Principles.