The Canadian dollar fell sharply against the US currency on Wednesday as heavy selling by a major bank player had added impact in thin markets, pushing the currency to a two-month low. Bond prices slid, hurt by strong stock markets and declining oil prices. The currency finished at C$1.2414 to the US dollar, or 80.55 US cents, down from C$1.2310 to the US dollar, or 81.23 US cents, at Tuesday's close.
The Canadian dollar retreated early in the session, as US third-quarter growth came in slightly ahead of previous estimates.
The decline picked up speed as it broke through resistance at C$1.2400 to the US dollar, touching a two-month low of C$1.2467 to the greenback, or 80.21 US cents.
Analysts said the big move was largely due to a combination of an absence of market players and a major bank-owned investor making year-end adjustments.
"I wouldn't say this means anything, it's just a function of not enough people being around and a bank having to do something that they need to do," said Jeremy Friesen, senior currency strategist at RBC Capital Markets.
Also speeding the currency's decline were oil prices that fell hard on a surprise increase in US oil inventories. High energy prices were seen as a support during the currency's runup earlier in the year.
"It's a strike against the Canadian dollar that we've had energy prices take another hit," said Doug Porter, senior economist at BMO Nesbitt Burns.
The currency has now fallen more than 5 percent from the 12-1/2 year highs it hit in late November as indications that the Bank of Canada is in no hurry to raise rates have coincided with a US dollar that has steadied after falling sharply for most of the year.
"I'm reluctant to read too much into what's gone on with the C$, but it's becoming a little bit more impressive with every passing day," Porter said.
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