OTTAWA: The Canadian dollar firmed modestly against the greenback on Friday, sticking to a tight range as it was supported by data that showed domestic factory sales rose more than expected in September.
A higher price of oil also helped the loonie stabilize the
day after a drop in crude knocked the currency lower. Whip-saw trading for the Canadian dollar in recent sessions, partly due to movements in oil prices, has left the currency moving sideways for the week.
While analysts expect the Canadian dollar is likely to consolidate around current levels in the short-term, most see more weakness down the line for the loonie.
"I think we're rangebound for the US dollar-Canadian dollar for now and the next move is really going to have to come from a major data point," said Mazen Issa, senior Canada macro strategist at TD Securities in Toronto.
Issa sees next week's inflation data or third-quarter gross domestic product at the end of the month as potential catalysts, while more signs of strength in the US economy could also lift the greenback to the detriment of the loonie.
"The bias, for now, is you could still see a higher US dollar-Canadian dollar, but I would admit that the rally in US dollar-Canadian dollar has looked a little tired recently, maybe a bit overbought," he said.
The Canadian dollar was at C$1.1339 to the greenback, or 88.19 US cents, stronger than Thursday's close of C$1.1376, or 87.90 US cents. For the week, the loonie was on track to decline 0.3 percent.
Data that showed Canadian manufacturing sales rose more than expected in September helped put a floor under the Canadian dollar, though that was tempered by a strong retail sales report out of the United States.
Canadian government bond prices were mostly lower across the maturity curve, with the two-year down 3 Canadian cents to yield 1.021 percent and the benchmark 10-year down 19 Canadian cents to yield 2.066 percent.
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