Canada's trade deficit widened in August to C$3.41 billion from a revised C$2.98 billion shortfall in July, as exports fell for a third consecutive month, Statistics Canada said.

"This is another disappointing trade report," said Ryan Brecht, a senior economist at Action Economics.

It suggests the Bank of Canada will not change rates this month and reduces the chances of a rate hike in December, Brecht said.

The central bank has raised rates twice since July. But the chances of another hike this year dropped to 60 percent from 66 percent before the data, the overnight index swaps market indicated. They were nearly 100 percent before Governor Stephen Poloz signaled last week that a third hike was not imminent.

At 9:19 a.m. ET (1319 GMT), the Canadian dollar was trading at C$1.2542 to the greenback, or 79.73 US cents, down 0.5 percent.

The currency's strongest level of the session was C$1.2463, while it touched its weakest since Aug. 31 at C$1.2546.

The price of oil, one of Canada's major exports, steadied on expectations that Saudi Arabia and Russia would extend.