The Canadian dollar strengthened slightly against its US counterpart on Friday, recovering from an earlier seven-month low as increased US political uncertainty pressured the greenback, offsetting lower oil prices. For the week, the loonie fell 0.4 percent, pressured by acknowledgement last week by the Bank of Canada that it had considered cutting interest rates at its policy meeting.
Position squaring ahead of the weekend helped lessen immediate pressure on the Canadian dollar, but technical indicators and recent movement in yield spreads leave the currency vulnerable to additional losses, said Jack Spitz, managing director of foreign exchange at National Bank Financial. Oil prices fell on doubts over Opec's planned output cut, even as data showed US oil drillers cut rigs for the first time since June. US crude oil futures settled $1.02 lower at $48.70 a barrel.
Oil is one of Canada's major exports. The US dollar fell against a basket of major currencies after the Federal Bureau of Investigation said it would probe additional emails related to Democratic presidential candidate Hillary Clinton's use of a personal email server while secretary of state. The Canadian dollar ended at C$1.3384 to the greenback, or 74.72 US cents, slightly stronger than Thursday's close of C$1.3387, or 74.70 US cents.
The currency's strongest level of the session was C$1.3353, while it touched its weakest since March 9 at C$1.3434. The US economy grew at its fastest pace in two years in the third quarter as a surge in exports and a rebound in inventory investment offset a slowdown in consumer spending. Speculators trimmed bearish bets on the Canadian dollar, Commodity Futures Trading Commission data showed. Net short Canadian dollar positions dipped to 13,324 contracts in the week ended October 25 from 14,298 in the prior week. Canadian government bond prices were mixed across the yield curve, with the two-year up 3 Canadian cents to yield 0.568 percent and the benchmark 10-year rising 10 Canadian cents to yield 1.227 percent.
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