TORONTO: The Canadian dollar weakened against its US counterpart on Wednesday as oil prices fell and investors turned attention to US President Donald Trump's promised announcement on tax cuts.
Oil prices fell ahead of data that will shed light on US crude inventories after an industry report indicated a surprise rise in fuel stocks, underscoring the persistence of global oversupply. Canada is a major exporter of oil.
US crude  prices were down 0.91 percent at $49.11 a barrel.
The US dollar  climbed against a basket of major currencies ahead of the tax overhaul announcement which could help to revive investor interest in US dollar investments including the stock market after the initial post-election rally began to fade in recent weeks.
In data published on Wednesday, Canadian retail sales were down 0.6 percent in Feb, falling by more than economists' forecasts for a decline of 0.1 percent, though January was revised slightly higher to a gain of 2.3 percent from the previously reported 2.2 percent.
The data does not alter the outlook for strong economic growth in the first quarter, said Andrew Kelvin, senior rates strategist at TD Securities. He expects gross domestic product to rise around three percent annualized.
At 9:21 a.m. ET (1321 GMT), the Canadian dollar was trading at C$1.3579 to the greenback, or 73.64 US cents, slightly weaker than Tuesday's close of C$1.3565, or 73.72 US cents.
The currency traded in a range of C$1.3558 to C$1.3609. It touched on Tuesday its weakest in 14-months at C$1.3626.
Losses on Wednesday for the loonie came after the United States said this week that it would impose preliminary anti-subsidy duties averaging 20 percent on imports of Canadian softwood lumber.
Still, lumber exports to the United States account for just 1.3 percent of Canada's total exports, said BMO Capital Markets, in a research note. "The numbers show that the macro economic impact on Canada should be limited."
Canadian government bond prices were higher across a flatter yield curve, with the two-year up one Canadian cent to yield 0.754 percent and the 10-year  rising 16 Canadian cents to yield 1.505 percent.
The 10-year yield fell 2.4 basis points further below its US equivalent to a spread of -82.9 basis points, its widest since January 2016.
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