The Canadian dollar strengthened to its highest in more than two weeks against the greenback on Friday, as hopes rose for a trade deal between the United States and China and as domestic data showed a lower-than-expected drop in retail sales. At 4:36 p.m. (2136 GMT), the Canadian dollar was trading 0.7 percent higher at 1.3144 to the greenback, or 76.08 US cents, its biggest gain this month.
The currency touched its strongest level since Feb. 6 at 1.3134. For the week, it was up 0.8 percent. "It is less about the loonie and more about the US dollar, generally driven by a combination of dovish Fedspeak and optimism on trade," said Eric Theoret, a currency strategist at Scotiabank. "It's helping all of the commodity currencies." Canadian government bond prices were higher across a flatter yield curve, with the 10-year rising 28 Canadian cents to yield 1.891 percent.
The Federal Reserve will keep an open mind as it begins a broad review this year of its monetary policy framework that could result in changes to how it goes about ensuring that prices remain stable and employment plentiful, Fed vice chair Richard Clarida said. US President Donald Trump said that he expects to meet China's leader, Xi Jinping, soon and said they may nail down the final points of a trade deal.
Canada exports many commodities, including oil, so its economy could benefit from an improved outlook for global trade. Oil touched its highest since mid-November as hopes of a US-China trade deal offset a new record US oil supply. US crude oil futures settled up 0.5 percent at $57.26 a barrel.
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