TORONTO: The Canadian dollar weakened against its US counterpart on Wednesday, tracking the drop in crude oil prices, although maintaining its recent holding pattern ahead of the New Year's Day holiday on Friday.
Crude oil prices retreated as indications of slowing global energy demand bumped up against record-high inventories.
US crude prices were down 2.01 percent to $37.11 a barrel. Brent crude lost 1.59 percent to $37.19, moving toward 11-year lows.
The slump in oil prices weighed on risk appetite , providing an additional headwind for commodity linked currencies.
At 9:12 a.m. EST (1412 GMT), the Canadian dollar was trading at C$1.3889 to the greenback, or 72.00 US cents, weaker than Tuesday's close of C$1.3823, or 72.34 US cents.
The currency's strongest level of the session was C$1.3830, while its weakest level was C$1.3916. It hit its weakest level in more than 11-years on Dec. 18 at C$1.4003.
Canadian government bond prices were lower across the maturity curve, with the two-year price down 1 Canadian cent to yield 0.503 percent and the benchmark 10-year falling 12 Canadian cents to yield 1.420 percent.
The curve steepened for as second straight day, as the spread between the 2-year and 10-year yields widened 1.2 basis points to 91.7 basis points, indicating underperformance for longer-dated maturities.
The Canada-US 10-year spread was 1 basis point narrower at -89.0 basis points, trimming recent outperformance for Canadian government bonds, but trading near a record wide gap.
The domestic data calendar remains bare. But further details of next week's Government of Canada 2-year auction will be announced.
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