Canadian dollar extends this week's decline as oil falls

TORONTO: The Canadian dollar weakened against its US counterpart on Friday as oil fell, but the currency stuck to a narrower range than the day before as bond yields steadied and domestic data showed retail sales falling less than expected in January.

The price of oil, one of Canada's biggest exports, was down 0.5% at $59.68 a barrel. It follows a big sell-off the previous day as a new wave of coronavirus infections across Europe triggered fresh lockdowns and dampened expectations of any imminent recovery in fuel demand.

The Canadian dollar was trading 0.3% lower at 1.2519 to the greenback, or 79.88 US cents, having traded in a range of 1.2461 to 1.2527.

The loonie has pulled back from its strongest intraday level in three years at 1.2361 on Thursday, while it was on track to decline 0.4% for the week.

Canadian retail sales fell by 1.1% in January from December as provincial governments began re-introducing health restrictions to combat a resurgence of coronavirus cases, Statistics Canada said.

Still, analysts had forecast a decline of 3%, while sales were estimated by Statistics Canada to rebound 4% in February.

US bond yields edged off the 14-month highs reached the day before. Investors have worried that the recent move higher in long-term rates could crimp global economic recovery.

Canadian government bond yields were lower across the curve, with the 10-year down 1.1 basis points at 1.596%. On Thursday, it touched its highest intraday level since January last year at 1.677%.