TORONTO: The Canadian dollar lost more than a cent of value versus its US counterpart on Thursday, as it headed for a second straight day of declines on renewed weakness in crude oil prices.
US crude inventories rose much more than expected, data showed, again raising market fears about oversupply.
Canada is a major oil producer, and weakness in the price of the commodity has weighed on the currency for months.
The Canadian dollar was at C$1.2543 to the greenback, or 79.72 US cents, much weaker than Wednesday's close of C$1.2418, or 80.53 US cents.
"Even within the commodity group Canada is experiencing a little independent weakness. You can put that on the movement we've seen in oil prices," said Mark Chandler, head of Canadian fixed income and currency strategy at Royal Bank of Canada.
He said the loonie, as Canada's currency is colloquially known, will likely face more obstacles in coming weeks and months as slumping oil prices feed into softer economic data.
"Unequivocally, over the next three months or so you're going to see a patch of soft data coming out in Canada related to the oil-price decline. It's hard to bet against the trend of a weaker Canadian dollar going forward."
Traders will pay attention to a speech on inflation expectations from Bank of Canada Deputy Governor Agathe C?t? later in the session, with another rate cut priced into market expectations after January's surprise reduction.
"The market's wary whenever you have a Bank of Canada official speaking now because they've been so dovish and that may be another factor behind currency weakness here," Chandler said.
Canadian government bond prices were mixed along the maturity curve, with the two-year down 1 Canadian cents to yield 0.427 percent and the benchmark 10-year up 12 Canadian cents to yield 1.461 percent.
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