Canadian dollar gives back weekly gain as oil dips further

TORONTO: The Canadian dollar weakened against its US counterpart on Friday, with the currency giving back this week's gains as oil fell for a second day and domestic data showed the first decline in wholesale trade since April.

The loonie was trading 0.4% lower at 1.2757 to the greenback, or 78.39 US cents, having traded in a range of 1.2695 to 1.2763. For the week, it was on track to be nearly unchanged.

Canadian wholesale trade fell by 1.3% in December from November on motor vehicles and motor vehicles parts and accessories, Statistics Canada said. Analysts had forecast a 1.5% decrease.

The Bank of Canada has forecast that the economy will contract in the first quarter after lockdowns were implemented to curb the spread of the coronavirus pandemic.

The price of oil, one of Canada's major exports, extended its pull back from a one-year high after OPEC again lowered its demand forecast and the International Energy Agency said the market remains oversupplied.

US crude prices were down 0.4% at $58.01 a barrel, while global equity markets dipped as investors awaited progress toward more US fiscal stimulus.

The US dollar gained ground against a basket of major currencies, rebounding after it was pressured this week by tame US inflation data and a dovish Federal Reserve outlook.

Canadian government bond yields were higher across much of a steeper curve in sympathy with US Treasuries. The 10-year rose 1.8 basis points to 1.018%, approaching an 11-month high it notched intraday on Thursday at 1.031%.