Loonie dips as oil retreats, U.S dollar advances

The Canadian dollar lost almost half a U.S. cent on Thursday amid weakness in oil prices and strength for the U.S. greenback as investors weigh a possible June interest rate boost by the Federal Reserve.

The Canadian dollar retreated Thursday amid a drop in the price of oil, coupled with a higher U.S. dollar.

The loonie dropped 0.48 of a U.S. cent to end at 76.31 cents. The  dollar has now fallen for three straight days, including a dip of 0.71 of a U.S. cent on Wednesday.

The loonie is closely tied to the price of oil, and the price of benchmark North American crude dropped 11 cents to finish at $48.67 US per barrel Oil futures had been down more than $1 earlier in the day before they recovered most of their losses.

"The main factor weighing on prices is the much appreciated U.S. dollar," Carsten Fritsch, analyst at Commerzbank, told Reuters.

"What is more, rain forecast in the Canadian oil province of Alberta is giving rise to hopes that the devastating wildfires there could be brought under control."

Oil was lower after the U.S. Energy Information Administration said Wednesday that crude inventories unexpectedly rose by 1.3 million barrels to 541.3 million barrels for the week ended May 13.

The U.S. dollar gained strength and stock markets sold off as investors digested the possibility of a June interest rate hike by the U.S. Federal Reserve.

The Dow Jones industrial average fell 91.22 points to close at 17,435.40. The Standard & Poor's 500 lost 7.59 points to 2,040.04, and the Nasdaq composite pulled back 26.59 points to end at 4,712.53.

On Bay Street, the S&P/TSX composite index ended the day with a small loss as it got a lift from materials, gold and consumer staples stocks. The index dipped 8.69 points to 13,817.32.

with files from The Canadian Presss