At 4 p.m. (2100 GMT), the Canadian dollar
The currency's weakest level of the session was C$1.2428, while it touched its strongest since Sept. 25 at C$1.2318.
"It is largely reflecting a weaker U.S. dollar move," said Mark Chandler, head of Canadian fixed income and currency strategy at RBC Capital Markets.
The U.S. dollar <.DXY> slid to a three-year low against a basket of major peers after the U.S. Treasury secretary said he welcomed weakness in the currency.
"There's no need for a weaker U.S. dollar on the part of the U.S. economy," Chandler said. "In some sense, his comments were misinterpreted."
The price of oil, one of Canada's major exports, was boosted by a record 10th straight weekly decline in U.S. crude inventories. U.S. crude oil futures
Canada's chief negotiator in talks to update the North American Free Trade Agreement, Steve Verheul, told Reuters he had "a constructive conversation" with his U.S. counterpart after presenting Canada's suggested amendments to the sunset clause.
The United States has demanded a sunset clause that would kill NAFTA if it is not renegotiated after five years.
Investors are awaiting domestic data later in the week that could help guide expectations for further Bank of Canada interest rate hikes.
Last week, the central bank raised its benchmark interest rate by 25 basis points to 1.25 percent, its highest since January 2009, after recent data showed stronger inflation and strong job growth.
Canadian retail sales data for November is due on Thursday and the December inflation report is due on Friday.
Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year
The 10-year yield touched its highest intraday level since September 2014 at 2.271 percent.
(Reporting by Fergal Smith; Editing by Phil Berlowitz and Peter Cooney)
By Fergal Smith
