By Solarina Ho
TORONTO (Reuters) - The Canadian dollar was marginally weaker against its U.S. counterpart on Tuesday despite firmer oil prices, as the greenback rallied ahead of the annual Jackson Hole conference of global central bankers.
Earlier in the session, the loonie had touched its strongest in three weeks after robust domestic retail sales data for June bolstered expectations the Bank of Canada could raise interest rates again in October.
The strength of the economy this year helped spur the central bank last month to raise rates for the first time in nearly seven years.
"Canadian data has persistently surprised on the upside," said Mazen Issa, senior FX strategist at TD Securities, adding it gave more credence for the central bank to raise interest rates again sometime this fall. "Certainly the economy is firing on all cylinders."
But he cautioned the loonie was vulnerable to data disappointment.
The currency touched C$1.2526 to the U.S. dollar, or 79.83 U.S. cents, after the retail figures were released, its strongest since Aug. 1, before giving up gains.
At 4:00 p.m. ET (2000 GMT), the Canadian dollar
Its weakest level of the session was C$1.2595.
With little Canadian economic data on tap for the remainder of the week, the central bank summit in Wyoming was the main focal point for investors who are hoping for insight into monetary policy outlook.
The greenback rebounded after falling for two straight days, bolstered by position-squaring and some caution ahead of the event. [FRX/]
Canadian government bond prices were lower across the maturity curve, with the two-year
The Canada-U.S. two-year bond spread stood at -5.7 basis points, while the 10-year spread stood at -29.4 basis points.
(Reporting by Solarina Ho; Editing by Chris Reese)