TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Thursday, pulling back from a one-week high earlier in the session as the greenback recovered some lost ground against a basket of major currencies.
The loonie had rallied this week as investor fears of a more unfavorable trade outlook for Canada abated and after U.S. President Donald Trump signed orders on Tuesday smoothing the path for the Keystone XL oil pipeline.
If constructed, Keystone would provide oil producers in Canada with a quicker route to send crude to U.S. Gulf Coast refiners.
But analysts and traders said the C$8 billion pipeline was far from being a certainty.
The U.S. dollar .DXY rebounded after its worst run since August as investors refocused on the chances of higher U.S. inflation and growth.
At 9:16 a.m. ET (1416 GMT), the Canadian dollar CAD=D4 was trading at C$1.3102 to the greenback, or 76.32 U.S. cents, weaker than Wednesday's close of C$1.3067, or 76.53 U.S.
The currency’s weakest level was C$1.3130, while it touched its strongest since Jan. 18 at C$1.3054.
Losses for the Canadian dollar came even as prices of oil, one of Canada's major exports, rose. U.S. crude CLc1 prices were up 1.25 percent at $53.41 a barrel.
Canadian government bond prices were mixed across the yield curve, with the two-year CA2YT=RR up 0.5 Canadian cent to yield 0.815 percent and the 10-year CA10YT=RR rising 2 Canadian cents to yield 1.820 percent.
The 10-year yield touched its highest since Dec. 16 at 1.851 percent as Wednesday’s record highs on Wall Street reduced demand for safe haven assets such as bonds.
Reporting by Fergal Smith; Editing by Meredith Mazzilli
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