Profit-taking pressures Canadian dollar to 8-day low

By Fergal Smith

TORONTO (Reuters) -The Canadian dollar edged lower against its U.S. counterpart on Thursday as oil prices fell and investors took some profit after recent moves higher for the currency.

The loonie was trading 0.1% lower at 1.3475 to the greenback, or 74.21 U.S. cents. It touched its weakest since April 12 at 1.3489 but was still up nearly 3% since mid-March.

After an "aggressive move" higher there is bound to be some profit-taking, said Bipan Rai, global head of FX strategy at CIBC Capital Markets.

"The broader trend we still feel is downside for USD-CAD. That's tied to bearishness on the (U.S.) dollar that seems to be developing."

Bearish factors for the greenback include a potential peak in U.S. interest rates and worries about the U.S. debt ceiling, Rai said.

The price of oil, one of Canada's major exports, settled 2.4% lower at $77.29 a barrel on fears a possible recession could dent fuel demand and after a rise in U.S. gasoline inventories.

The impact on the Canadian dollar from the U.S. Federal Reserve raising interest rates more than the Bank of Canada is not a "major concern" because of a flexible exchange rate and the BoC's independent monetary policy, Governor Tiff Macklem said.

Canadian government bond yields were lower across the curve, tracking moves in U.S. Treasuries. The 10-year eased 8.5 basis points to 2.978%, extending its pullback from a six-week high on Tuesday at 3.107%.

(Reporting by Fergal Smith; Editing by Sharon Singleton and Jonathan Oatis)