Canadian dollar hits one-month low as firm U.S. data boosts greenback

TORONTO (Reuters) - The Canadian dollar hit a one-month low against its U.S. counterpart on Tuesday, pressured by broader gains for the greenback, as North Korea tensions eased and data showed a jump in U.S. retail sales.

FILE PHOTO: A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. REUTERS/Mark Blinch/File Photo

The U.S. dollar .DXY climbed against a basket of major currencies after North Korea's leader delayed a decision on firing missiles toward Guam. Also aiding the greenback, U.S. retail sales recorded their biggest increase in seven months in July.

Worries that weaker growth in China will weigh on commodity prices added to pressure on Canada’s commodity-linked currency, said Amo Sahota, director at Klarity FX in San Francisco.

U.S. crude oil prices CLc1 hit a three-week low before paring some losses, while copper CMCU3 prices also lost ground.

At 5 p.m. EDT (2100 GMT), the Canadian dollar CAD=D4 was trading at C$1.2757 to the greenback, or 78.39 U.S. cents, down 0.3 percent.

The currency’s strongest level of the session was C$1.2720, while it touched its weakest since July 12 at C$1.2778.

Resales of Canadian homes fell 2.1 percent in July from June, the fourth straight monthly decline, as the cooling down of the Toronto housing market continued, the Canadian Real Estate Association said.

Separate data showed that lending to Canadian small businesses rose for a fifth straight month in June on stronger activity in construction and other major industries, suggesting companies are adding to solid growth in the domestic economy.

Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries. The two-year CA2YT=RR fell 3.5 Canadian cents to yield 1.243 percent and the 10-year CA10YT=RR declined 25.5 Canadian cents to yield 1.907 percent.

Investors are awaiting negotiations for modernizing the North American Free Trade Agreement, which start on Wednesday, and Canada's inflation data for July, due on Friday. ECONCA

There may be some position squaring by investors who had got long the Canadian dollar ahead of the inflation report, Sahota said.

Soft inflation data could reduce the chances of additional interest rate hikes, he added. The central bank hiked rates last month for the first time in nearly seven years.

Reporting by Fergal Smith; Editing by James Dalgleish