Canadian factory sales were down by 1.8 percent in June from May, with declines for petroleum and coal products, transportation equipment, and chemical industries, Statistics Canada said. Analysts had forecast a decrease of 1.0 percent.

The price of oil, one of Canada's major exports, fell after US data showed crude output there had jumped to its highest in more than two years.

US crude  prices were down 0.56 percent at $46.52 a barrel.

At 9:31 a.m. ET (1331 GMT), the Canadian dollar was down 0.1 percent at C$1.2635 to the greenback, or 79.15 US cents.

The currency's weakest level of the session was C$1.2647, while it touched its strongest since Aug. 4 at C$1.2588.

On Wednesday, the loonie rallied more than 1 percent as US Federal Reserve concerns over inflation and the disbanding of US President Donald Trump's manufacturing council and strategic policy forum weighed on the greenback.

The US dollar  rebounded across the board on Thursday, reserving some of its strongest gains against the euro after minutes of the July meeting by the European Central Bank prompted investors to cover bearish bets against the greenback.

Canadian government bond prices were lower across a steeper yield curve in sympathy with US Treasuries. The two-year fell 3 Canadian cents to yield 1.248 percent, and the 10-year  declined 21 Canadian cents to yield 1.896 percent.

Canada's closely watched inflation data for July is due on Friday.