Canadian dollar outpaces greenback, posts new seven-week high as oil rises

The Canadian dollar strengthened to a fresh seven-week high against its US counterpart on Friday, with the risk-sensitive, commodity-linked currency outpacing broader gains for the greenback as oil and stocks climbed. For the week, the loonie rose 0.8 percent, its second straight advance.
"Oil and stops has CAD higher," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets. Stop-loss orders, which are used by investors to limit losses on a trade, were triggered below C$1.3200 to the greenback, Anderson said. Major US stock indexes powered to another day of fresh record highs, while the US dollar gained ground against a basket of major currencies.
The US Federal Reserve is widely expected to raise interest rates for the first time this year when it meets next week. "I do think (the Canadian dollar rally) will reverse after the Fed raises rates, but tough to jump in front of right now." said Anderson. Yields on Canada's bonds will fall further below those of their US counterparts, say strategists, softening the blow of expected Fed rate hikes on already stretched Canadian households.
Higher prices for oil, one of Canada's major exports, have helped support the Canadian dollar after last week's output cut agreement by members of the Organization of the Petroleum Exporting Countries. US crude oil futures settled up 66 cents at $51.50 a barrel on hopes that non-Opec producers meeting in Vienna would also agree to cut output.
The Canadian dollar ended at C$1.3180, or 75.87 US cents, stronger than Thursday's close of C$1.3191, or 75.81 US cents. The currency's weakest level of the session was C$1.3213, while it touched its strongest since October 20 at C$1.3153. Some market players believe that the Bank of Canada would prefer a weaker currency to support the country's exporters. Canadian government bond prices were lower across a steeper yield curve in sympathy with US Treasuries. The two-year fell 4 Canadian cents to yield 0.741 percent and the benchmark 10-year declined 63 Canadian cents to yield 1.731 percent. It touched its highest intraday since November 9, 2015 at 1.758 percent.