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The Canadian dollar strengthened against its U.S. counterpart on Friday to notch its fourth straight monthly gain, its longest winning run in six years, as domestic data showed the economy expanded more than expected in May.

The gain for the loonie on Friday follows a decline in recent days. As the end of the month approaches, some market players tend to rebalance their currency hedges.

“As the month-end passed in London for the big global investors ... then I think the market said upward pressure in USD-CAD is off, back to where we were, which is down below 1.34,” said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets. “I think we’ll see more of that next week.”

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The loonie has benefited in July from a weakening of the U.S. dollar, as coronavirus cases climbed in the United States, and from higher prices for oil, one of Canada’s major exports.

On Friday, the loonie was trading 0.3 per cent higher at 1.3377 to the greenback, or 74.76 U.S. cents, taking its gain for the month to 1.5 per cent. The monthly winning streak, which followed a sharp decline in March when financial markets were pummeled by the coronavirus crisis, was the currency’s longest since 2014.

Canadian gross domestic product rose by 4.5 per cent in May, and a preliminary flash estimate sees a further 5 per cent increase in June as the economy reopens following COVID-19 lockdowns, Statistics Canada said. Economists had expected a 3.5 per cent gain for May GDP.

U.S. crude oil futures settled 0.9 per cent higher at $40.27 a barrel, benefiting from news that U.S. oil output cuts in May were the largest on record.

Canadian government bond yields were higher across the curve, with the 10-year yield up 2.1 basis points at 0.468 per cent.

Canadian financial markets will be closed on Monday for a civic holiday.

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