The loonie was trading 0.6% lower at 1.2355 to the greenback, or 80.94 U.S. cents, adding to declines on Tuesday and Wednesday. It touched its weakest level since April 28 at 1.2378.
"The Canadian dollar was hammered as the prospect of two U.S. rate hikes erased the advantage the currency had benefited from when it was just the Bank of Canada forecasting rate increases," Rahim Madhavji, president at KnightsbridgeFX.com, said in a note.
A majority of 11 Fed officials penciled in at least two quarter-point rate increases for 2023 in a surprise move on Wednesday, boosting the U.S. dollar to a two-month high against a basket of major currencies.
Previous guidance was for the first hike to come in 2024.
Canada is a major producer of commodities, including copper and oil, which have benefited from Federal Reserve stimulus.
Copper prices fell to their lowest level in two months, while oil settled 1.5% lower at $71.04 a barrel.
The Bank of Canada is starting to see signs that the country's red hot housing market is cooling down, although a return to a normality will take time, Governor Tiff Macklem said on Wednesday.
Canadian home prices accelerated again in May from the previous month, posting the largest monthly rise in the history of the Teranet-National Bank Composite House Price Index, data showed on Thursday.
Data from Statistics Canada showed that foreign investors bought a net C$9.95 billion in Canadian securities in April, led by government bonds.
Canadian government bond yields were mixed across a flatter curve. The 10-year yield eased 4.8 basis points to 1.394%, erasing much of the previous day's move higher.
(Reporting by Fergal Smith, Editing by Nick Zieminski and Aurora Ellis)
By Fergal Smith