Canadian dollar falls by most in a month, lagging G10 currencies

TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Wednesday as oil prices edged lower and domestic data showed a steady profile for underlying inflation, with the currency pulling back from a 2-1/2-year high the day before.

Canada's annual inflation rate accelerated to 1.0% in November, up from a year-over-year increase of 0.7% in October, while the average of the Bank of Canada's three core measures was unchanged at 1.7%, holding below the central bank's 2% target, data from Statistics Canada showed.

The price of oil, one of Canada's major exports, was capped by a surprise gain in U.S. crude inventories and tighter coronavirus lockdowns in Europe. U.S. crude prices were down 0.1% at $47.57 a barrel.

The Canadian dollar was trading 0.4% lower at 1.2747 to the greenback, or 78.45 U.S. cents, its biggest decline since Nov. 12. It was the only G10 currency to lose ground against the U.S. dollar.

On Tuesday, the loonie touched its strongest intraday level since April 2018 at 1.2684. Bank of Canada Governor Tiff Macklem said on Tuesday that recent strengthening of the currency was hurting Canada's exports in the crucial U.S. market.

Separate data from Statistics Canada on Wednesday showed that Canadian wholesale trade rose by 1.0% in October from September, the sixth consecutive monthly increase.

Canadian government bond yields were mixed across a steeper curve, with the 10-year up 3.5 basis points at 0.764%.

(Reporting by Fergal Smith; editing by Jonathan Oatis)

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