Canadian dollar retreats on weaker oil prices, broadly stronger U.S. dollar

(Reuters) - The Canadian dollar fell to a near one-week low against its U.S. counterpart on Thursday as oil prices slipped and the U.S. dollar advanced against most major peers.

FILE PHOTO: The new Canadian five and 10 dollar bills, made of polymer, are displayed following an unveiling ceremony at the Bank of Canada in Ottawa April 30, 2013. REUTERS/Chris Wattie

At 3:10 p.m. EDT (1910 GMT), the Canadian dollar traded 0.4% lower at 1.3378 to the greenback, or 74.75 U.S. cents. The Canadian currency, which touched its strongest intraday level since March 21 on Tuesday at 1.3285, traded in a range of 1.3313 to 1.3397.

“The market tone appears somewhat tentative and oil prices are softening modestly from their recent highs,” Shaun Osborne, chief FX strategist at Scotiabank in Toronto, said in a note.

Oil prices fell nearly 2 percent on Thursday after sources said OPEC might raise output from July if Venezuelan and Iranian supplies fall further and prices keep rallying.

International benchmark Brent futures settled at $70.83 a barrel, down 90 cents.

Weakness in the price of oil, one of Canada’s major exports, has contributed to a slowdown in the Canadian economy and the Bank of Canada is seen keeping rates on hold in the coming months. The central bank has also worried about the impact of global trade tensions on economic activity.

New home prices in Canada were flat in February, for the sixth time in the past seven months, Statistics Canada said on Thursday.

“The continued weakness of home sales suggests that March’s rebound in housing starts is unlikely to be sustained, while the subdued pace of house price inflation points to spending growth remaining weak,” Stephen Brown, senior Canada economist at Capital Economics, said in a note.

The U.S. dollar index, which measures the currency against a basket of six rivals, was up broadly on strong producer price and jobless-claims data.

In the Canadian government bond market, the two-year fell 5.8 Canadian cents to yield 1.591% and the 10-year slipped 37 Canadian cents to yield 1.725%.

Reporting by Saqib Iqbal Ahmed; Editing by Susan Thomas and Tom Brown