The Canadian dollar gained ground against the US currency on Friday, rebounding from the previous day's weakness on resurgent oil prices. Domestic bond prices ended mixed in thin volumes. The currency finished at C$1.2116 to the US dollar, or 82.54 US cents, up from C$1.2185 to the US dollar, or 82.07 US cents, at Thursday's close.
As has been the case all week, traders stayed focused on commodity prices, and in particular oil, which is often closely correlated to the movement of the loonie because of Canada's status as a net oil exporter.
With no significant Canadian or US economic data on Friday, oil's rise back up to around $65 per barrel was the whole show, dragging the Canadian dollar higher against most other currencies.
"Looking at the $2 rise in the price of crude today, it's no real surprise to see dollar/Canada lower and the Canadian dollar itself performing well," said Jack Spitz, director of foreign exchange at National Bank of Canada.
Despite the strong rise, the currency is well shy of the 2005 high it hit last week, when it benefited from strong trade data and record high oil.
Worries about crude supply have been largely driving the oil price increase.
June retail sales and July consumer price index data will be watched closely next week, but until then traders will likely continue to focus on commodities.
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