TORONTO: The Canadian dollar stabilized on Friday after hitting a nearly two-month low against its US counterpart, helped by a recovery in oil prices, while the greenback pared some recent gains ahead of a speech by Federal Reserve Chair Janet Yellen
Yellen is expected to reinforce expectations that the Fed will hike US interest rates later this month.
The US dollar fell against a basket of major currencies as far-right candidate Marine Le Pen's chances in France's presidential election dimmed and economic data in Europe continued to point to a brightening recovery.
US crude prices were up 0.34 percent at $52.79 a barrel, recouping some of the previous session's losses, as a weaker US dollar encouraged buying, but investors remained cautious after Russian production figures showed weak compliance with a global deal to cut output.
Oil is one of Canada's major exports.At 9:21 a.m. (1421 GMT), the Canadian dollar was trading at C$1.3398 to the greenback, or 74.64 US cents, slightly stronger than Thursday's close of C$1.3399, or 74.63 US cents.
The currency's strongest level of the session was C$1.3379, while it touched its weakest since Jan. 4 at C$1.3422.
Increased expectations for Fed rate hikes overshadowed on Thursday data that showed stronger-than-expected growth for Canada's economy in the fourth quarter, with the performance not expected to prod the Bank of Canada to change its cautious stance on interest rates.
On Wednesday, the Bank of Canada held rates steady as it stayed focused on the "significant uncertainties" facing the economy, including the policies of US President Donald Trump.
Expected policy divergence between the Bank of Canada and the Fed will pressure the Canadian dollar over the coming months, a Reuters poll predicted.
Bank of Canada Senior Deputy Governor Carolyn Wilkins will give remarks on a panel at Yale Law School at 14:45 p.m. ET (1945 GMT) on the central bank perspective of blockchain and the future of finance.
Canadian government bond prices were slightly lower across the yield curve, with the two-year down 0.5 Canadian cent to yield 0.775 percent and the 10-year falling 8 Canadian cents to yield 1.706 percent.
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