The Canadian dollar CADUSD edged higher against its U.S. counterpart on Friday, adding to this week’s gains, as oil prices rose and domestic data showed the economy growing in line with expectations in October.
The gain for the loonie came as U.S. stock index futures seesawed following data that showed U.S. inflation cooling further but not enough to discourage the Federal Reserve from driving interest rates to higher levels next year.
The Canadian dollar was trading 0.2 per cent higher at 1.3625 to the greenback, or 73.39 U.S. cents, after moving in a range of 1.3576 to 1.3662.
For the week, the currency was on track to gain 0.6 per cent as mixed domestic inflation data left the door open to another interest rate hike by the Bank of Canada next month.
Money markets see a greater-than-50 per cent chance the central bank would tighten by 25 basis points at its next policy decision on Jan. 25.
The price of oil, one of Canada’s major exports, added to its gains over the past two weeks on expectations of a drop in Russian crude supply. U.S. crude prices were up 2.5 per cent at $79.44 a barrel.
The Canadian economy grew by 0.1 per cent in October versus September, with another 0.1 per cent increase in GDP seen likely in November, Statistics Canada data showed.
Separate data showed that factory sales likely gained 0.6 per cent in November.
Canadian government bond yields were higher across the curve, tracking the move in U.S. Treasuries.
The 10-year touched its highest level since Nov. 15 at 3.176 per cent before dipping slightly to 3.166 per cent, up 8.5 basis points on the day.