(Adds analyst quote and details throughout; updates prices)
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Canadian dollar strengthens 0.3% against the greenback
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Domestic economy grows by 0.1% in October
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Price of U.S. oil increases 3%
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10-year yield touches a near six-week high
TORONTO, Dec 23 (Reuters) – The Canadian dollar
strengthened to its highest level in more than one week against
its U.S. counterpart on Friday, as equity markets seesawed and
domestic data showed the economy still growing despite sharply
higher borrowing costs in recent months.
The loonie was trading 0.3% higher at 1.3605 to the
greenback, or 73.50 U.S. cents, to close out the last full
trading week of the year.
It touched its strongest intraday level since Dec. 15 at
1.3564, while it was up 0.7% for the week after posting declines
in the three previous weeks.
“The Canadian dollar continues to be at the mercy of equity
market volatility, of which there was a lot this week,” said
Erik Bregar, director, FX & precious metals risk management at
Silver Gold Bull.
Wall Street’s main indexes swung between gains and losses
after data showed U.S. inflation cooling further in November but
likely not enough to discourage the Federal Reserve from
sticking to its campaign to raise interest rates.
Higher prices for oil, one of Canada’s major exports, added
to support for the loonie. U.S. crude futures were up 3%
at $79.82 a barrel.
The Canadian economy grew by 0.1% in October and is expected
to expand at the same pace in November, a sign that the full
impact of Bank of Canada rate increases since March has yet to
play out.
Canada’s economy is likely to be particularly sensitive to
higher rates after Canadians borrowed heavily to buy houses
during the COVID-19 pandemic.
Investors seem to be betting on it, with the loonie headed
for its first annual decline since 2018. It has lost 7.1% since
the beginning of the year.
Canada’s 10-year yield touched its highest since
Nov. 14 at 3.190% before dipping to 3.175%, up 9.4 basis points
on the day.
(Reporting by Fergal Smith; editing by Jonathan Oatis and
Alistair Bell)
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