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Loonie claws back some of its weekly decline as oil rallies

Published 2020-04-24, 09:43 a/m
© Reuters.
USD/CAD
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CL
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CA10YT=RR
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* Canadian dollar rises 0.1% against the greenback

* Price of U.S. oil increases 6.8%

* Loonie is on track to fall 0.5% for the week

* Canadian bond yields trade mixed across the curve

By Fergal Smith

TORONTO, April 24 (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Friday as the price of oil extended its rebound from historically depressed levels, but the loonie was on track to end the week lower.

At 9:22 a.m. (1322 GMT), the Canadian dollar CAD=D4 was trading 0.1% higher at 1.4056 to the greenback, or 71.14 U.S. cents. The currency, which was down 0.5% for the week, traded in a range of 1.4026 to 1.4115.

"The CAD remains a slave to flows and risk appetite," strategists at Scotiabank said in a note. "While markets remain somewhat reluctant to embrace risk more fully, the CAD will likely struggle to extend gains much below 1.40 for the moment."

Canada runs a current account deficit and is a major exporter of commodities, including oil, so the loonie tends to be sensitive to the global flow of trade and capital.

U.S. crude oil futures CLc1 were up 6.8% at $17.62 a barrel but were headed for their third straight weekly loss as production shutdowns failed to keep pace with sliding demand due to the coronavirus crisis. Monday, U.S. oil fell into negative territory for the first time, to minus $37.63 a barrel.

Ottawa is rolling out more than C$200 billion ($142 billion) in measures to support Canada's economy, while the Bank of Canada has slashed interest rates by 150 basis points since March and begun buying Government of Canada bonds.

Canadian government bond yields were mixed across the curve on Friday, with the 10-year CA10YT=RR down less than one basis point at 0.594%.

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