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Canadian dollar weakens 0.3% against the greenback

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Touches its weakest intraday level since May 30

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Price of oil increases 2.8%

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Bond yields edge lower across the curve

By Fergal Smith

TORONTO, June 19 (Reuters) - The Canadian dollar

weakened to a near three-week low against its U.S. counterpart

in holiday-thinned trading on Thursday as the ongoing conflict

between Iran and Israel bolstered safe-haven demand for the

American currency.

The loonie was trading 0.3% lower at 1.3735 per U.S.

dollar, or 72.81 U.S. cents, after touching its weakest intraday

level since May 30 at 1.3746. On Monday, the currency touched an

eight-month high at 1.3537.

"The Canadian dollar has seen a sharp rally recently, so

some consolidation or modest retracement is to be expected,"

said Tony Valente, senior FX dealer at AscendantFX, adding that

geopolitical tensions have boosted demand for the U.S. dollar

and that the U.S. holiday has reduced market liquidity.

Wall Street and the U.S. bond market were closed for the

Juneteenth National Independence Day holiday.

The U.S. dollar added to this week's gains against a

basket of major currencies while the price of oil, one of

Canada's major exports, was up 2.8% at $77.25 a barrel as the

Middle East conflict threatened oil supplies.

Canadian retail sales data, due on Friday, could offer clues

on the strength of the domestic economy. Analysts expect an

increase of 0.5%.

On Wednesday, Bank of Canada Governor Tiff Macklem said the

prospect of a new Canada-U.S. trade deal offers hope that trade

tariffs will be removed, but cautioned that inflation could rise

if duties stayed in place. Investors see a roughly 75% chance

that the central bank will remain on hold at an interest rate

decision next month.

Canadian government bond yields edged lower across the

curve, with the 10-year down less than one basis

point at 3.328%.