- It touched its strongest intraday level since February 2018 at 1.2365.
TORONTO: The Canadian dollar fell against its broadly stronger US counterpart on Thursday, pulling back from an earlier three-year high as oil prices tumbled and a jump in bond yields weighed on risk appetite.
The S&P 500 receded from a record high as the move higher in bond yields accelerated a move out of growth stocks, while the US dollar rallied across the board after it was pressured the day before by the Federal Reserve's dovish guidance on interest rate hikes.
"The bond market will continue to grind higher until it forces the Fed into capping yields," said Tony Valente, a senior FX dealer at AscendantFX.
"The rebound in the USD was mainly due to the drive higher in long-term bond yields. Today's more than 7% drop in crude has also weighed down the CAD."
US crude oil futures settled 7.1% lower at $60.00 a barrel on growing worries about rising COVID-19 cases in Europe and the strengthening US dollar.
The Canadian dollar weakened 0.9% to 1.2516 per greenback, or 79.90 US cents, its biggest decline since Feb. 26.
It touched its strongest intraday level since February 2018 at 1.2365.
Canadian new home prices rose 1.9% in February from January, which was their fastest pace in more than three decades, Statistics Canada said.
Canada's retail sales report for January is due on Friday, which could help guide expectations for the Bank of Canada policy outlook. The central bank is likely to reduce its bond purchases as soon as next month, strategists say.
Canadian government bond yields rose across much of a steeper curve in sympathy with US Treasuries.