TORONTO, April 21 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Tuesday as uncertain prospects for Middle East pace talks weighed on investor sentiment, with the currency pulling back from its strongest level in nearly six weeks.
The loonie was trading 0.2% lower at 1.3667 per U.S. dollar, or 73.17 U.S. cents, after touching its strongest intraday level since March 13 at 1.36315.
"CAD stays resilient while escalation risk is contained and the broader U.S. dollar conflict premium continues to unwind, but it remains vulnerable to a renewed USD bid if the ceasefire is not extended or diplomacy stalls," said Kevin Ford, FX & macro strategist at Convera.
Iran said it had still yet to decide whether to attend last-ditch peace talks with the United States, after U.S. forces boarded a huge Iranian oil tanker at sea with just a day left before the ceasefire runs out in the war in the Gulf.
The price of oil, one of Canada's major exports, settled 2.8% higher at $92.13 a barrel as shipping traffic through the Strait of Hormuz remained largely halted, while the U.S. dollar advanced against a basket of major currencies.
Retail sales data that pointed to a strong U.S. economy added to support for the greenback.
"For now, markets are in a wait-and-watch mode," Ford said. "Until there is clearer, tangible progress, geopolitical risk is likely to keep overshadowing domestic policy developments and leave USD-CAD highly sensitive to headline swings."
Canada's Prime Minister Mark Carney announced a new, expanded advisory committee on Canada-United States economic relations, retaining only four people from the previous council formed under former Prime Minister Justin Trudeau.
Canadian bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year was up 4.6 basis points at 3.485%.
(Reporting by Fergal Smith; Editing by Alistair Bell)
By Fergal Smith
