Canadian dollar falls

The Canadian dollar fell against the US dollar on Friday as stock markets and commodity prices sagged, while the greenback strengthened. The Canadian dollar was also pressured by comments by Bank of Canada Governor Mark Carney on Thursday that the rapid appreciation of the Canadian currency could hinder economic recovery.
Shortly after Carney's remarks, Finance Minister Jim Flaherty said the rise of the currency is a concern "if there's a speculative element". "The comments just sort of reinforce those concerns from the perspective of the government and that has managed to shake out the long Canada positions," said George Davis, chief technical strategist, RBC Capital Markets.
The Canadian dollar, which touched a low of 88.90 US cents on Friday, finished the session at C$1.1179 to the US dollar, or 89.45 US cents, down from C$1.1032 to the US dollar, or 90.65 US cents, on Thursday. Canada is a major oil producer and the currency was pressured on Friday by a drop in oil prices after a three-day rally. The Canadian dollar was also hit by a rebound in the US dollar after it had spent most of the week under pressure as investors turned to higher-yielding currencies and other assets.
Rising stock markets, taken as a sign of investor willingness to take risks, have supported the Canadian dollar recently, and Friday's 69-point drop in the Toronto Stock Exchange's key index was another negative factor for the currency.
The Canadian dollar has risen about 18 percent against the greenback since early March, and given that gain it's not surprising to see a pullback now as recent optimism about a turnaround in the economy moderates, said David Bradley, director of foreign exchange trading at Scotia Capital.
"The rise in the Canadian dollar over the last couple of months ... probably appreciated too much in too short of a time so I'm not really surprised to see a bit of a correction," he said. Canadian bond prices were flat to higher, tracking the US Treasury market, which rose on Friday and extended gains made in the previous session after several successful auctions this week. The 30-year bond climbed C$1.05 to C$117.80 to yield 3.943 percent. The comparable US issue yielded 4.6433 percent. Canadian bonds mostly under-performed US Treasuries across the curve. The Canadian 30-year bond was 70 basis points below the US 30-year yield, compared with about 70 basis points below.