The Canadian dollar ended lower versus the US dollar on Friday due to nagging uncertainty about the outlook for the global economy, but a rally in stock markets and commodities help to cushion its fall. Canadian bond prices were higher across the curve as market expectations for a Bank of Canada rate cut early next week and persistent talk of a global recession were enough to keep more secure assets like government debt in demand.
The Canadian dollar closed at C$1.1869 to the US dollar, or 84.25 US cents, down from C$1.1816 to the US dollar, or 84.63 US cents, at Thursday's close. For the week, the currency fell 0.5 percent, which marked its third straight losing week. Last week, the currency fell 8.4 percent.
A rally on the Toronto Stock Exchange and a rebound in prices for oil and other key Canadian exports helped lift the Canadian dollar from its session low of C$1.1927 to the US dollar, or 83.84 US cents. But it was not enough to award the Canadian dollar a second straight winning session. The currency has not had back-to-back gains since September 25 and 26.
"Better commodity prices, and equity markets returning, favoured cyclical and commodity-based currencies including the Canadian dollar," said Matthew Strauss, senior currency strategist at RBC Capital Markets. "But just going into the weekend investors might have shied away from being too long in the risky asset classes including equities, commodities and, by extension, being too long in commodity-based currencies like the Canadian dollar."
Unlike recent weeks, moves in the Canadian dollar have become much more muted, which Strauss said is a sign that markets have started to show some semblance of stability. The slide in the Canadian dollar was cushioned by US data that showed housing starts continued to decline in September, which ate away at some of the greenback's gains.
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