Canadian dollar pares weekly gain as greenback selling eases

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TORONTO — The Canadian dollar fell

against its broadly stronger U.S. counterpart on Friday but held

on to much of this week’s gains as oil prices rose and a

preliminary estimate showed Canada’s economy rebounding in June.

The loonie was trading 0.3% lower at 1.2484 to the

greenback, or 80.10 U.S. cents, after trading in a range of

1.2423 to 1.2492.

For the week, it was up 0.6% after also gaining in the

previous week. It was down 0.7% in July.

The U.S. dollar rose as upbeat economic data helped

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reverse some of the losses from earlier this week when dovish

remarks by the Federal Reserve scuttled a month-long rally in

the U.S. currency.

“You had pretty substantial dollar selling over the course

of the week,” said Erik Nelson, a currency strategist at Wells

Fargo in New York.

“I think the thought is, there’s still risk of a hawkish

FOMC (Federal Open Market Committee),” Nelson added. “The market

doesn’t want to get too short (of) dollars here.”

The Canadian economy most likely expanded by 0.7% in June as

businesses reopened after shutdowns imposed to help fight the

coronavirus pandemic, Statistics Canada said. The economy shrank

by 0.3% in May, matching a forecast by analysts.

Canada’s employment report for July is due next Friday which

could help guide expectations for the Bank of Canada policy

outlook.

The price of oil , one of Canada’s major exports,

settled 0.5% higher at $73.95 a barrel, with demand growing

faster than supply and vaccinations expected to alleviate the

impact of a resurgence in COVID-19 infections across the globe.

Canadian government bond yields were mixed across the curve,

with the market closing early ahead of the Civic Holiday on

Monday. The 10-year yields was little changed at

1.203%.

(Reporting by Fergal Smith; editing by Emelia Sithole-Matarise

and Sandra Maler)