Canadian dollar pads weekly gain

The Canadian dollar edged higher on Friday against its US counterpart, padding this week's gains as stronger-than-expected domestic manufacturing data supported prospects of the Bank of Canada dropping its cautious stance. Canadian manufacturing sales unexpectedly rose in January for the third month in a row, driven by a gain in sales of non-durable goods, including petroleum and coal products, data from Statistics Canada showed.
The 0.6 percent gain beat expectations for a 0.2 percent decline, while sales volumes were also solid, rising 0.7 percent. "The data in Canada is still pretty strong and people are looking as to whether the Bank (of Canada) will adjust their narrative, or sound a little bit less dovish," said Jimmy Jean, senior economist at Desjardins.
For the week, the loonie rose 0.9 percent, helped by losses for the greenback after the Federal Reserve's interest rate decision on Wednesday. "They increased interest rates but I think they did still indicate a very moderate pace for further increases in their rate and I think the Canadian dollar did benefit from that significantly," said Darren Richardson, senior corporate dealer at CanadianForex. Stability this week for crude oil prices added to support for the loonie, Richardson said.
US crude prices settled 3 cents higher at $48.77 a barrel, finishing the week with modest gains after tumbling 9 percent last week on concerns that an Organization of the Petroleum Exporting Countries' production cut was failing to reduce a global supply overhang.
Oil is one of Canada's major exports. The Canadian dollar ended at C$1.3337 to the greenback, or 74.98 US cents, slightly stronger than Thursday's close of C$1.3347, or 74.92 US cents. The currency traded in a range of C$1.3304 to C$1.3378. It touched on Thursday its strongest in more than two weeks at C$1.3277. Speculators cut bullish bets on the Canadian dollar for the second straight week, data from the Commodity Futures Trading Commission and Reuters calculations showed. Canadian dollar net long positions fell to 21,458 contracts as of March 14 from 29,220 a week earlier.
Canadian government bond prices were higher across a flatter yield curve, with the two-year up 2.5 Canadian cents to yield 0.805 percent and the 10-year rising 35 Canadian cents to yield 1.762 percent. The 10-year yield has pulled back from a 20-month high of 1.876 percent reached on Monday.