The Canadian dollar CADUSD strengthened against its U.S. counterpart on Friday as oil prices rose and equity markets globally clawed back some recent losses, but the currency still added to a string of weekly declines.
The loonie was up 0.7% higher at 1.2950 to the greenback, or 77.22 U.S. cents, after trading in a range of 1.2915 to 1.3049.
“We are still getting tugged around by risk sentiment,” said Shaun Osborne, chief currency strategist at Scotiabank.
Growth stocks led a rebound in Wall Street’s main indexes in a week marred by worries about the worsening outlook for economic growth.
The price of oil, one of Canada’s major exports, climbed on fears supplies would tighten if the European Union bans Russian oil. U.S. crude oil futures settled 4.1% higher at $110.49 a barrel.
For the week, the loonie was down 0.3%, its seventh straight weekly decline. It touched on Thursday its weakest intraday level in 18 months at 1.3076.
“There’s a pretty solid background story to the Canadian dollar at the moment - resilient growth, strong commodity prices, hawkish central bank - that’s not been reflected in the CAD price action in the last little while,” Osborne said.
As Canada’s economy overheats, the Bank of Canada is likely to be among the first of the major central banks to lift interest rates to a more normal setting even as worries persist about record-high levels of household debt, strategists say.
April inflation data, due next Wednesday, could provide clues on the outlook for higher rates.
Canadian government bond yields climbed across the curve, tracking the move in U.S. Treasuries. The 10-year was up 5.5 basis points at 2.956%, after touching on Thursday its lowest intraday level in 10 days at 2.887%.
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