* Canadian dollar weakens 0.1% against the greenback
* For the week, the loonie advances 0.6%
* Flash estimate shows wholesale trade falling in March
* Canadian bond yields ease across the curve
TORONTO, April 26 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Friday as U.S. inflation data suggested the Federal Reserve could turn more hawkish compared to the Bank of Canada and some other major peers, but the currency still notched a weekly gain.
The loonie was trading 0.1% lower at 1.3665 to the U.S. dollar, or 73.18 U.S. cents, with the currency pulling back after it touched its strongest level since April 10 at 1.3633. For the week, the loonie strengthened 0.6%.
"It is getting harder for the Fed not to sound hawkish given the inflation data surprises since January," strategists at TD Securities, including Jayati Bharadwaj, said in a note.
"On the flip side, recent progress on inflation in other major developed markets including CA (Canada), UK, EU probably mean that those central banks would be able to cut before the Fed and provide the USD a support from relative rate divergence," the strategists said.
U.S. monthly inflation rose moderately in March, but stubbornly higher costs for housing and utilities suggested the Fed, which is due to make a policy decision on Wednesday, could keep interest rates elevated for a while. In contrast, money markets see a roughly 50% chance the Bank of Canada could begin easing as soon as June.
Canadian wholesale trade fell 1.3% in March from February, a preliminary estimate from Statistics Canada showed, adding to evidence of a slowdown in the domestic economy.
The price of oil, one of Canada's major exports, was up 0.4% at $83.90 a barrel, drawing support from Middle East tensions.
Canadian government bond yields moved lower across a flatter curve. The 10-year was down 3.4 basis points at 3.835%, after it touched on Thursday its highest intraday level in nearly six months at 3.891%. (Reporting by Fergal Smith; editing by Diane Craft)
