Canada's dollar nudged lower against the greenback on Friday, pressured by bank tightening in China, but easing concerns about the euro zone debt crisis helped the commodity-linked currency recoup early losses. The euro was set for its best week in over a 1-1/2 years following successful securities auctions by indebted euro zone members, calming fears of a credit crisis in the region.
Earlier in the session, the Canadian dollar fell nearly a penny, moving closer to US dollar parity, after China's central bank raised the reserve requirement ratio for its biggest banks. Beijing's move fanned expectations that China's appetite for commodities could wane, which hit resources prices as well as currencies of commodity-exporting countries like Canada.
"I don't think anybody is really that shocked that China is slowly trying to raise rates and raise some of the banking requirements," said Steve Butler, director of foreign exchange trading at Scotia Capital. The currency finished at C$0.9894 to the USD, or $1.0107, down from Thursday's North American finish of C$0.9892 to the USD, or $1.0109. The currency moved in a tight range on Friday, hitting a high of C$0.9885 and low of C$0.9978, with a slew of US data having limited impact.
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