Canadian dollar edges higher

The Canadian dollar edged higher against its US counterpart on Friday even as oil prices fell, with recent upbeat domestic data helping to underpin the currency ahead of a Bank of Canada interest rate decision next week.
As recently as October the central bank said it had considered easing interest rates as it downgraded its economic outlook. But data last week showed a surge in jobs in December and the first trade surplus in more than two years in November, while a Bank of Canada survey this week pointed to improving business conditions.
Together with recent strengthening of commodity prices and improved global data it may tilt the Bank of Canada's communication toward more optimism, said Michael Goshko, corporate risk manager at Western Union Business Solutions.
"With the Canadian dollar in a pretty firm strengthening trend, perhaps that could add fuel to that trend."
The Canadian dollar ended at C$1.3126 to the greenback, or 76.18 US cents, slightly stronger than Thursday's close of C$1.3132, or 76.15 US cents.
The currency's strongest level of the session was C$1.3111, while its weakest was C$1.3168.
For the week, the loonie rose 0.8 percent. It touched on Thursday a near 3-month high at C$1.3028.
"Importers have been pretty busy" since the start of the year as the stronger loonie helped them buy cheaper US dollars, Goshko said.
Meanwhile, speculators have raised bearish bets on the Canadian dollar. Net short Canadian dollar positions rose to 7,935 contracts as of Jan. 10 from 3,871 a week earlier, data from the Commodity Futures Trading Commission and Reuters calculations showed.
Prices of oil, one of Canada's major exports, fell on lingering doubts over the extent of OPEC cuts, with sentiment worsened by concerns over the economic health of China after it reported the steepest falls in overall exports since 2009.
Canadian government bond prices were lower across a steeper yield curve in sympathy with US Treasuries, pressured by data supporting the notion of a steady US economic expansion and rising Wall Street stock prices.
The two-year bond fell 4.5 Canadian cents to yield 0.797 percent and the 10-year declined 38 Canadian cents to yield 1.711 percent.