Canadian dollar posts big gain
The Canadian dollar weakened against its US counterpart on Friday, but the currency held on to much of its weekly gain as oil prices rose and investors turned attention to domestic inflation data.
The loonie was trading 0.1 percent lower at 1.3515 to the greenback, or 73.99 US cents, after trading in a range of 1.3495 to 1.3549. For the week, it was up 0.9 percent, its biggest weekly advance since June.
Much of the currency's weekly gain was down to selling of EUR-CAD, said Amo Sahota, director at Klarity FX in San Francisco.
The European Central Bank signaled on Thursday it was likely done with its interest rate hiking cycle, pressuring the euro.
The price of oil, one of Canada's major exports, settled 0.6 percent higher at $90.77 a barrel, notching a 10-month high, as supply tightness spearheaded by Saudi Arabian production cuts combined with optimism around Chinese demand to lift crude.
"I will be watching how US vs CAD yield spreads fare after the CAD inflation (report) and FOMC (decision) next week," Sahota said.
Economists expect Canada's consumer price index report, due on Tuesday, to show inflation rising to an annual rate of 3.8 percent in August from 3.3 percent in July.
The Federal Open Market Committee is expected to leave the US benchmark interest rate on hold in a 5.25 percent-5.50 percent range at the close of its September 19-20 meeting on Wednesday.
Canada's 2-year yield has traded further below its US equivalent in recent weeks to a gap of about 30 basis points, after briefly trading above the US rate in June.
Canadian government bond yields rose across the curve on Friday, tracking moves in US Treasuries. The 10-year was up 4.5 basis points at 3.738 percent.
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