U.S. bond yields rose and the greenback rallied to a basket of major currencies, as the U.S. consumer prices index rose at an annual rate 7.5%. This fuelled speculation about a Fed interest rate hike of 50 basis points next month.

After trading in a range from 1.2666 to 1.2717, the Canadian dollar fell 0.3% to 1.2707, or 78.70 U.S.cents.

The currency's decline was caused by the closure of an important U.S.-Canada trade route as a result of protests against Canada's pandemic policies.

Oil, Canada's largest export, was under pressure by potential U.S.-Iran nuke talks that could lead to an increase global crude oil supplies. U.S. U.S. crude oil prices dropped 0.5% to $89.26 per barrel.

The curve showed that Canadian government bond yields were higher than the U.S. Treasuries.

The 10-year rose by 4.7 basis points to 1.894%, moving closer towards the 1.905% peak in January. This was its highest level for nearly three years.