* Canadian dollar ends at C$1.3138, or 76.12 U.S. cents
* Bond prices lower across the yield curve
By Fergal Smith
TORONTO, Feb 21 The Canadian dollar weakened on
Tuesday to hit a 12-day low against its U.S. counterpart, whose
gains against a basket of major currencies offset higher prices
for oil, a major export for Canada.
The greenback climbed after hawkish comments from
Federal Reserve officials pointed to a potential U.S. interest
rate increase next month.
"Our view is that the Canadian dollar would likely weaken
over the medium term and that's really based on this outlook for
higher U.S. interest rates," said Eric Viloria, currency
strategist at Wells Fargo.
He says the interest-rate differential between Canada and
the United States has become a more important driver for the
direction of the Canadian dollar than crude oil.
U.S. crude prices settled 66 cents higher at $54.06 a
barrel after the Organization of the Petroleum Exporting
Countries said it was sticking to its agreement to cut
production and hoped compliance with the deal would be even
The Canadian dollar ended at C$1.3138 to the
greenback, or 76.12 U.S. cents, weaker than Monday's close of
C$1.3101, or 76.33 U.S. cents, according to Reuters data.
The currency's strongest level of the session was C$1.3100,
while it touched its weakest level since Feb. 9 at C$1.3165.
Monday was a market holiday in Canada. The Bank of Canada's
official close on Friday was C$1.3099, or 76.34 U.S. cents.
More than 100 French left-wing lawmakers decided on Tuesday
to appeal to the country's Constitutional Council to block a
contentious free trade deal between the European Union and
The passage last week of the Comprehensive Economic and
Trade Agreement could reduce Canada's reliance on the North
American Free Trade Agreement, under which the country sends 75
percent of its exports to the United States.
Any talks to renew NAFTA would involve all three member
nations, a top Canadian official said, dampening speculation the
United States might seek to sit down with Canada first and then
Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries as improved risk appetite
reduced demand for safe-haven assets.
The two-year dipped 1.5 Canadian cents to yield
0.786 percent, and the 10-year declined 7 Canadian
cents to yield 1.719 percent.
Domestic retail sales data for December is due on Wednesday.
Economists expect it to be unchanged but to show a rise of 0.6
percent after excluding autos.
(Reporting by Fergal Smith; Editing by Lisa Von Ahn and Leslie