C$ weakens with oil but set for 2nd straight weekly gain

TORONTO: The Canadian dollar weakened against its US counterpart on Friday as oil prices fell, but the loonie stayed on course to advance for a second straight week after the Bank of Canada said the challenges facing the economy were temporary.

At 9:36 a.m. (1436 GMT), the Canadian dollar was trading 0.4 percent lower at 1.3262 to the greenback, or 75.40 US cents. The currency, which on Wednesday touched its strongest intraday level in more than 5 weeks at 1.3180, traded in a range of 1.3183 to 1.3269.

For the week, the loonie was up 0.8 percent. The Bank of Canada held interest rates steady as expected on Wednesday but said more increases would be necessary even though low oil prices and a weak housing market will harm the economy in the short term.

US crude oil futures were down 1.3 percent on Friday at $51.91 a barrel.

Still, oil, which is one of Canada's major exports, has been boosted this week by hopes the United States and China may soon resolve their trade dispute. It has rebounded about 22 percent since slumping in December to an 18-month low.

The US dollar strengthened against a basket of major currencies as US data showed that consumer prices fell for the first time in nine months in December amid a plunge in the cost of gasoline but underlying inflation pressures remained firm.

Canadian government bond prices were higher across the yield curve in sympathy with US Treasuries, with the two-year

price up 6.6 Canadian cents to yield 1.882 percent and the 10-year rising 33 Canadian cents to yield 1.947 percent.

Canada is working with politicians and businesses in the United States to pressure President Donald Trump to scrap tariffs on its steel and aluminum, Prime Minister Justin Trudeau said on Thursday.