(Adds strategist comment, updates prices) * Canadian dollar at C$1.2688, or 78.81 U.S. cents * Loonie touches strongest since May 2016 at C$1.2627 * Domestic home resales see largest drop in June since 2010 * Bond prices mixed across the yield curve By Alastair Sharp TORONTO, July 17 (Reuters) - The Canadian dollar pulled back against its U.S. counterpart after hitting a fresh 14-month high on Monday, after domestic data showed a big drop in home sales.
Resales of Canadian homes fell 6.7 percent in June from May, the largest monthly drop since 2010 and the third straight monthly decline as Toronto sales plunged, the Canadian Real Estate Association said.
At 4 p.m. EDT (2000 GMT), the Canadian dollar was trading at C$1.2688 to the greenback, or 78.81 U.S. cents, down 0.3 percent.
Last week, the loonie rose 1.8 percent as the Bank of Canada raised rates for the first time in seven years and signaled it will hike again over the coming months. The currency has gained more than 6 percent since the central bank turned hawkish in June.
"There's definitely a path towards greater Canadian dollar appreciation," said Brad Schruder, director of corporate sales and structuring at BMO Capital Markets.
He said gains for the loonie in the days after the hike could push U.S. dollar sellers to trade on even small bounces, while greenback buyers wait for even more advantageous terms.
"The buyer, sensing this tectonic shift and blood in the water, has taken a step back from an urgency perspective," he said, adding that the Canadian currency could push below C$1.25.
The currency's weakest level of the session was C$1.2699, while it touched its strongest since May 2016 at $1.2627.
In other domestic data, foreign investors ramped up purchases of Canadian securities in May to C$29.5 billion, the second largest amount on record.
Prices of oil, one of Canada's major exports, fell about 1 percent as investors await strong indications that an OPEC-led effort to drain a glut was proving effective, while output increases in some top producers eased, keeping losses in check.
Speculators cut bearish bets on the loonie for a seventh straight week, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed on Friday.
Canadian government bond prices were mixed across the yield curve, with the two-year down 1.5 Canadian cents to yield 1.198 percent and the 10-year up 1 Canadian cent to yield 1.894 percent.
On Thursday, the 10-year yield touched its highest since December 2014 at 1.948 percent.
Data on Canada's manufacturing sales for May is due on Wednesday, while retail sales data for May and the June inflation report are due out on Friday.
(Additional reporting by Fergal Smith; Editing by Bernadette Baum and Sandra Maler)