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* Canadian dollar weakens 0.9% against the greenback
* Loonie hits an eight-day low at 1.2729
* Price of U.S. crude settles 3.2% lower
* Canadian bond yields fall across a flatter curve
By Fergal Smith
TORONTO, Feb 26 (Reuters) - The Canadian dollar tumbled against its broadly stronger U.S. counterpart on Friday as this week's spike in bond yields weighed on investor sentiment, with the loonie extending its pullback from a three-year high the day before.
The Canadian dollar
On Thursday, the loonie touched its strongest intraday level since February 2018 at 1.2464.
"The loonie is losing ground along with other risk assets as market volatility increased on a small tantrum over the rising U.S. yields," said Amo Sahota, director at Klarity FX in San Francisco.
The safe-haven U.S. dollar rose against a basket of major currencies and global equity markets swooned, even as the bond selloff eased a bit. Fears of rising inflation still weighed on sentiment as data showed a strong rebound in U.S. consumer spending.
"The underlying fundamentals are unchanged so commodity demand strength will remain robust and that should help underpin the loonie and prevent this from turning into a complete rout," Sahota said.
Canada's C$100 billion ($79 billion) stimulus plan is justified by the economic hole caused by the COVID-19 pandemic, government sources said, as analysts warned Ottawa against racking up too much debt and making investments that fail to boost growth.
Canadian government bond yields fell across a flatter curve
in sympathy with U.S. Treasuries. The 10-year
On Thursday, it touched a 13-month high at 1.486%, while it was up 18.5 basis points for the week. (Reporting by Fergal Smith; Editing by Steve Orlofsky and David Gregorio) ((firstname.lastname@example.org; +1 647 480 7446;)) Keywords: CANADA FOREX/ (UPDATE 1)
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