TORONTO (Reuters) - The Canadian dollar weakened to a two-week low against its U.S. counterpart on Thursday, brushing off firm domestic data a day after the Bank of Canada left the door open to cutting interest rates.
The greenback was stronger against a basket of currencies as solid U.S. labor and housing data backed the case for strong U.S. economic growth.
Canadian manufacturing sales rebounded 1.5 percent in November from October, Statistics Canada said. Analysts polled by Reuters had expected a 1.0 percent rise.
On Wednesday, the Bank of Canada left its policy rate on hold at 0.5 percent. The central bank warned that a rate cut remains on the table, warning there would be "material consequences" if U.S. President-elect Donald Trump enacts protectionist policies.
"The underlying tone from the Bank of Canada was dovish, and while noting that a rate cut remains on the table is not necessarily new it is important from a currency perspective that it was mentioned at the level that the currency was trading at the time," said Mazen Issa, senior foreign exchange strategist at TD Securities in New York.
The loonie, as Canada's currency is colloquially known, was at the strong end of its recent C$1.30 to C$1.36 range before the central bank governor's comments.
It CAD=D4 settled at C$1.3314 to the greenback, or 75.11 U.S. cents, on Thursday, weakening from Wednesday's close of C$1.3259, or 75.42 U.S. cents.
The currency's strongest level of the session was C$1.3253, while it touched its weakest since Jan. 4 at C$1.3353.
Trump's choice for commerce secretary, Wilbur Ross, said on Wednesday that renegotiating the North American Free Trade agreement with Mexico and Canada would likely be the Trump administration's first priority.
Canada sends 75 percent of its exports to the United States.
Trump takes office on Friday.
Prices of oil, one of Canada's major exports, recovered from a one-week low as the International Energy Agency said oil markets were tightening even before cuts agreed by OPEC and other producers took effect. [O/R]
In separate domestic data, foreign investment in Canadian securities dropped to an 11-month low in November, with non-residents buying a net C$7.24 billion worth of bonds, stocks and money market paper, Statistics Canada said.
Canadian government bond prices were lower across a steeper yield curve, with the two-year CA2YT=RR down 3 Canadian cents to yield 0.787 percent and the 10-year CA10YT=RR falling 41 Canadian cents to yield 1.756 percent.
Additional reporting by Fergal Smith; Editing by Meredith Mazzilli and Lisa Shumaker