Canadian dollar heads for weekly gain as greenback slips

TORONTO: The Canadian dollar strengthened against its US counterpart on Friday, turning higher for the week, as higher oil prices and a broader decline for the greenback offset domestic data showing a bigger-than-expected drop in wholesale trade.

The US dollar was set to post a second week of losses amid an extended retreat in Treasury yields, as investors increasingly bought into the Federal Reserve's insistence it would keep an accommodative policy stance for a while longer.

The price of oil, one of Canada's major exports, was on track for a weekly gain as a stronger demand outlook and signs of economic recovery in China and the United States offset rising COVID-19 infections in some other major economies.

US crude prices were up 0.1% at $63.5 a barrel, while the Canadian dollar was trading 0.4% higher at 1.2497 to the greenback, or 80.02 US cents. For the week, the loonie was up 0.2%.

Canadian wholesale trade fell 0.7% in February from January, compared with the 0.4% decline that analysts expected, on building materials and supplies, as well as motor vehicles and parts, data from Statistics Canada showed.

Separate data showed that foreign investors bought a net C$8.52 billion in Canadian securities in February, led by a four-year high investment in corporate shares.

The Canadian economy is likely to grow at a slower pace this quarter and next than previously expected, but tighter lockdown restrictions from another wave of coronavirus cases were unlikely to derail the economic recovery, a Reuters poll showed.

The Bank of Canada is due to update its economic forecasts next week.

Canadian government bond yields were higher across a steeper curve, tracking US Treasuries. The 10-year rose 2.6 basis points to 1.511%, after touching on Thursday its lowest intraday level in five weeks at 1.434%.