Canadian dollar rally loses momentum as wholesale trade falls

TORONTO (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Tuesday, pulling back from its strongest intraday level in nearly two weeks, as softer-than-expected domestic data offset higher oil prices and broad declines for the greenback.

A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. REUTERS/Mark Blinch

At 3:43 p.m. (1943 GMT), the Canadian dollar CAD=D4 was trading near flat at C$1.3043 to the greenback, or 76.67 U.S. cents.

The loonie, which was boosted on Friday by hot inflation data, touched its strongest level intraday since Aug. 9 at C$1.3015. But it underperformed other G10 currencies, with the exception of the safe-haven Japanese yen.

“The American dollar is getting beaten up today and the Canadian dollar is not taking advantage, unlike some others,” said Adam Button, a currency analyst at ForexLive.

The U.S. dollar .DXY fell against a basket of major currencies after U.S. President Donald Trump criticized the head of the Federal Reserve for raising interest rates.

The price of oil, one of Canada's major exports, rose to its highest in a week ahead of a forecast drawdown in U.S. crude inventories. U.S. crude oil futures CLc1 settled 1.4 percent higher at $67.35 a barrel.

Underperformance by the loonie against its G10 peers came as data showed that Canadian wholesale trade decreased by 0.8 percent in June from May, the second decline in three months, led by weaker sales in the motor vehicles and parts subsector. Economists in a Reuters poll had forecast a 0.8 percent rise.

“The weakness in autos speaks to fears about tariffs and NAFTA, and it shows it (trade uncertainty) spilling over into the real economy,” Button said.

U.S. and Mexican trade ministers were set to resume talks over the North American Free Trade Agreement in Washington in a final push for a deal on autos that would open the door for Canada to return to negotiations this week.

Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries. The 10-year CA10YT=RR fell 9 Canadian cents to yield 2.262 percent.

Domestic retail sales data for June is due on Wednesday, which could help guide expectations for further interest rate hikes from the Bank of Canada. BOCWATCH

Reporting by Fergal Smith; Editing by Frances Kerry and Peter Cooney