The Canadian dollar strengthened against the US currency on Friday, benefiting from expectations of foreign interest in Canadian companies and the greenback's slide on the back of weak growth data.
Domestic bond prices rose, particularly on the long end of the yield curve. The currency finished around C$1.1319 the US dollar, or 88.35 US cents, up from C$1.1377, or 87.90 US cents, at Thursday's close.
Thin volumes and uncertainty over the US rate outlook have made for volatile markets, traders said, attributing Friday's currency move largely to a US government report that said the US economy grew at a much slower clip than expected in the second quarter.
"It suggests that the Fed is indeed going to pause (in its interest rate increases), so we have a sell-off of US dollars against the majors, with the Canadian dollar supported by equity-related transactions and by the negative US dollar influence," said Jack Spitz, director of foreign exchange at National Bank of Canada.
News that Inco Ltd had failed in its bid for Falconbridge Ltd prompted some to bet on a bidding war for Inco. Foreign bids for Canadian companies are cited by some as a key support for the domestic currency.
The currency made most of its gains early in the session, but for the second straight day it ran into US dollar support around the 100-day moving average. The Canadian dollar topped out at C$1.1285to the US dollar or 88.61 US cents.
Against the euro and yen, the currency slid, as expectations that the Bank of Canada will hold interest rates steady over the next few months prompted Canada to seek out rising rates in Europe and Japan.
Comments
Comments are closed.