C$ weaker as lower oil prices offset firm domestic data

TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Thursday as renewed worries about a global oil glut weighed, more than offsetting stronger-than-expected domestic wholesale trade data.

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

Prices for oil LCOc1CLc1, a major Canadian export, fell more than 2 percent after a rise in U.S. gasoline inventories helped push total U.S. petroleum supplies to a record high.

Meanwhile the value of Canadian wholesale trade surged by 1.8 percent in May from April, led by the motor vehicle and auto parts subsector, Statistics Canada said. In volume terms sales rose by 1.5 percent.

“Right now the main factor affecting the softness of the loonie is oil,” said Alphonso Esparza, a senior market analyst at OANDA Corp, referring to the Canadian currency by its common colloquial name.

“Crude is being pushed downward just because of the comments from the Russian energy minister yesterday that there’s no real back-and-forth or open line of communication with OPEC,” he said.

Russia’s Alexander Novak said there were no discussions about possible coordination with OPEC on oil output after a failed attempt to jointly maintain production levels earlier this year.

The Canadian dollar CAD=D4 ended the session at C$1.3086 to the greenback, or 76.42 U.S. cents, weaker than Wednesday's close of C$1.3055, or 76.60 U.S. cents.

The currency’s strongest level of the session was C$1.3023, while its weakest was C$1.3101, its weakest intraday level since July 12.

Canadian economic growth will pick up a bit next year, helped by federal fiscal stimulus, but subdued U.S. demand and weak oil prices are expected to limit gains, a Reuters poll found.

A long-awaited child benefit payment that kicked in on Wednesday is expected to provide a small but much-needed economic boost, even if cash-strapped consumers use some of the extra money to pay down debt.

Canadian government bond prices were higher across the maturity curve.

The two-year CA2YT=RR price rose 6.5 Canadian cents to yield 0.572 percent and the benchmark 10-year CA10YT=RR added 18 Canadian cents to yield 1.105 percent. The 10-year yield had earlier touched its highest since June 24 at 1.174 percent.

The curve steepened as the spread between the two-year and 10-year yields widened to 53.3 basis points, indicating underperformance for longer-dated maturities.

Canadian retail sales data for May and inflation data for June are due on Friday.

Additional reporting by Fergal Smith; Editing by W Simon and James Dalgleish