The Canadian dollar retreated against the US currency on Friday, pressured by lower commodity prices, as the greenback gained broadly on US economic data. Oil, a key Canadian export, slipped to around $78 a barrel on a stronger US dollar, high inventories and expectations for reduced heating demand in the United States. Gold was also weaker.
The US dollar rose across the board on US reports indicating a rise in manufacturing and stable consumer price inflation, while the euro remained pressured by concerns about the Greek economy. Despite a slightly bearish picture for the Canadian dollar, the commodity-linked currency is still seen as a favourite among investors, currency watchers said.
"We're trading in an inside range today and I don't think that means anything significant in the grander scheme of things. It's just consolidation. We think the trend is still lower for the US dollar," said Shaun Osborne, chief currency strategist at TD Securities. The Canadian dollar finished at C$1.0294 to the US dollar, or 97.14 US cents, down from Thursday's finish at C$1.0234 to the US dollar, or 97.71 US cents. It edged 0.14 percent higher for the week.
"You've got two divergent forces going on here: you've got the euro selling off, which is causing the US dollar to be bid, and technical levels that have been broken in dollar/Canada that argue for a higher Canadian dollar," said Firas Askari, head of foreign exchange trading at BMO Capital Markets. On Thursday, the Canadian dollar shot up to C$1.0225 to the US dollar, or 97.80 US cents, its highest intraday level since October 15.
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