TORONTO: The Canadian dollar weakened slightly against its US counterpart on Thursday as oil prices seesawed, although some losses were pared after tamer-than-expected US inflation data.
Gains for the US dollar against a basket of currencies were mostly undone after data showed US consumer prices rose less than expected in March and underlying inflation slowed, suggesting the Federal Reserve will remain cautious about raising interest rates this year.
US crude was unchanged at $41.76 a barrel after the International Energy Agency trimmed its forecast for demand growth but said a fall in oil output in the United States was speeding up.
The loonie hit a nearly nine-month high at C$1.2744 on Wednesday but closed lower on the day after the Bank of Canada counseled caution on the outlook for economic growth.
The central bank warned that the country's improving economy faced downside risks, including a stronger currency that could drag on non-commodity exports, although it held interest rates steady and raised growth forecasts.
Still, the implied probability of a Bank of Canada rate cut this year has dropped to less than 10 percent from more than 50 percent at the start of March.
At 9:46 a.m. EDT (1346 GMT), the Canadian dollar was trading at C$1.2833 to the greenback, or 77.92 US cents, slightly weaker than Wednesday's close of C$1.2815, or 78.03 US cents.
The currency's strongest level of the session was C$1.2782, while its weakest was C$1.2897.
The loonie has rebounded 14.5 percent since hitting a 12-year low of C$1.4689 in January.
New home prices in Canada rose by 0.2 percent in February from January, pushed up by continuing strength in the major regions of Toronto and Vancouver, Statistics Canada said.
Canadian government bond prices were lower across the maturity curve, with the two-year price down 3 Canadian cents to yield 0.589 percent and the benchmark 10-year falling 35 Canadian cents to yield 1.288 percent.
The spread between the 2-year and 10-year yields widened by 2.3 basis points to 69.9 basis points, indicating underperformance for longer-dated maturities.
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