* Canadian dollar at C$1.2316, or 81.20 U.S. cents
* Bond prices mixed across a steeper yield curve
* Oil prices rise 0.9 percent
TORONTO, Feb 1 (Reuters) - The Canadian dollar steadied against its U.S. counterpart on Thursday after posting a four-month high the day before, as investors weighed the prospects for future Federal Reserve interest rate decisions and turned attention to Friday's U.S. jobs data.
The U.S. dollar erased early gains after Fed comments
about rising inflation this year failed to lift the currency from near its three-year lows. The prospect of higher inflation has supported market expectations for another interest rate hike from the Fed as soon as March. Friday's non-farm payrolls report will provide the next major clue for investors. The price of oil, one of Canada's major exports, rose after a survey showed commitment by the Organization of the Petroleum Exporting Countries to supply cuts remains in place.
U.S. crude prices were up 0.9 percent at $65.3 a
barrel. At 9:30 a.m. EST (1430 GMT), the Canadian dollar was trading nearly unchanged at C$1.2316 to the greenback, or 81.20 U.S. cents. The currency traded in a narrow range between C$1.2295 and C$1.2331. On Wednesday, it touched its strongest since Sept. 20 at C$1.2250. Data on Wednesday showed robust growth for Canada's economy in November. But markets expect the Bank of Canada to hold off from further interest rate hikes until the second quarter due to an uncertain outlook for the North American Free Trade agreement. Canadian Prime Minister Justin Trudeau said on Wednesday he did not think U.S. President Donald Trump would pull out of NAFTA despite slow progress at negotiations to update the $1.2 trillion trade pact. Canadian government bond prices were mixed across a steeper
yield curve, with the two-year up 0.5 Canadian cent to yield 1.839 percent and the 10-year falling 19
Canadian cents to yield 2.315 percent. The 10-year yield touched its highest intraday since July 2014 at 2.327 percent.
(Reporting by Fergal Smith Editing by Chizu Nomiyama)