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The Canadian dollar CADUSD strengthened against its U.S. counterpart on Friday, recouping losses from earlier in the week, as equity markets rallied and investors turned attention to an upcoming interest rate decision by the Bank of Canada.

The loonie was trading 0.6% higher at 1.3382 to the greenback, or 74.73 U.S. cents, rebounding from its lowest intraday level in nearly two weeks at 1.3520 on Thursday.

For the week, the currency was up 0.1%, for a fifth consecutive week of gains, the longest such sequence since May 2021.

“To a large extent the squeeze higher we had in U.S. equity markets today explains the strength in the Canadian dollar that we’ve seen,” said Shaun Osborne, chief currency strategist at Scotiabank. “There is still a quite strong short-term correlation between the CAD and U.S. equities.”

Canada is a major producer of commodities, including oil, so the loonie tends to be sensitive to the signal from stocks about the economic outlook.

Wall Street’s main indexes rose and oil settled 1.2% higher at $81.31 a barrel.

“I imagine next week will be a bit more focused on the Bank (of Canada) decision and the potential for that to add a bit more volatility to the CAD,” Osborne said.

The BoC will hike its key interest rate by a quarter of a percentage point to 4.50% next Wednesday and then hit pause on its aggressive tightening campaign, according to a Reuters poll of economists.

Domestic data showed retail sales edging down by 0.1% in November from October. That’s better than the 0.5% decline economists had forecast, while a flash estimate showed sales rising by 0.5% in December.

The Canadian 10-year yield rose 10.1 basis points to 2.849%, after touching on Thursday a five-month low intraday at 2.701%.