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The Canadian dollar CADUSD weakened against its U.S. counterpart on Friday as the intensifying war in Ukraine triggered a flight to quality, overshadowing encouraging economic data from the United States, Canada’s biggest trade partner.

The loonie was trading 0.4% lower at 1.2735 to the greenback, or 78.52 U.S. cents, after touching its weakest intraday level since Monday at 1.2792. For the week, it was down 0.2%.

Equity markets globally sank, while commodities and the save-haven U.S. dollar soared as the war in Ukraine escalated, with Russia seizing a big nuclear plant.

U.S. job growth accelerated in February, pushing the unemployment rate to a two-year low of 3.8%. Canada sends about 75% of its exports to the United States, including oil.

U.S. crude prices settled 7.4% higher at $115.58, the highest since September 2008, as the disruption of Russian exports due to Western sanctions outweighed hopes for more Iranian supply.

“The currency market is struggling to pick winners and losers out of the commodity explosion,” said Adam Button, chief currency analyst at ForexLive. “Large parts of the Canadian economy are unambiguous winners from commodity strength but housing is extremely vulnerable to higher rates.”

Canada’s dollar will strengthen over the coming year as soaring commodity prices boost the domestic economic outlook and the Bank of Canada hikes interest rates further, a Reuters poll showed.

The central bank on Wednesday raised its key interest rate for the first time since October 2018 to fight inflation and made clear further hikes were on the way.

The value of Canadian building permits fell by 8.8% in January from December, missing estimates for a 2% gain.

Canadian government bond yields were lower across the curve, tracking the move in U.S. Treasuries. The 10-year touched its lowest since Jan. 6 at 1.646% before recovering slightly to 1.658%, down 12 basis points on the day.

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