The Canadian dollar finished higher on Friday, trimming gains against the US currency as oil prices lost ground and market players looked to consolidate positions heading into the weekend. Early action saw the currency boosted by firm commodity prices, while the greenback weakened on a revival in investors' thirst for riskier assets.
The currency reached as high as C$1.1445 to the US dollar or 87.37 US cents. However, the currency gave up much of those gains as the price of oil, a key Canadian export, fell to around $69 a barrel. Equity markets also came off session highs, taking a bite out of risk appetite.
Still, the Canadian dollar finished at C$1.1542 to the US dollar, or 86.64 US cents, up from C$1.1562 to the US dollar, or 86.49 US cents, at Thursday's close. "I just think the way that equities have been slowly drifting off, it's been a bit of a consolidation day. We've probably seen a good part of the range for this session," said Steve Butler, director of foreign exchange trading at Scotia Capital.
"We've had a couple of topsy-turvy days, but really no direction again this week." The currency is off 1.7 percent on the week, as the range shifted lower between C$1.1335-C$1.1639, compared with C$1.1183-C$1.1450 last week. The Canadian dollar has cooled in recent weeks after surging about 20 percent between March and the beginning of June, partly from volatile oil prices and after the Bank of Canada sounded the alarm about the currency's quick ascent.
Next week's trading may be volatile because of two market holidays, the July 1 Canada Day and Independence Day in the US, which will be observed on Friday. The currency may continue to stay rangebound until the biggest data point of the week - the US non-farm payroll figure for June, which is likely to overshadow Canadian GDP for April.
"It's a very light data calendar next week. The big event will be the US non-farm payrolls, so we'll see bigger price action on the back of that rather than the Canadian data," said Charmaine Buskas, senior economics strategist at TD Securities.
As equity markets gave up early gains, most Canadian bond prices moved higher across the curve, mirroring their US counterparts. Market players appeared to be taking the Bank of Canada's debt auction announcement in stride, despite the boost to issuance.