The Canadian dollar extended its weekly gain against the U.S. dollar on Friday as the greenback posted broad-based declines and domestic data showed that retail sales rose in November.
The loonie was trading 0.5% higher at 1.3715 per U.S. dollar, or 72.91 U.S. cents, after touching its strongest intraday level since January 2 at 1.3705. For the week, the currency was up 1.5%, its biggest weekly gain since May.
Investor angst in the currency markets this week over intensifying geopolitical tensions has largely been borne by the U.S. dollar. The greenback added to its weekly decline against a basket of major currencies as traders stayed alert to the prospects of intervention in the yen.
“I’d call it (U.S.) dollar weakness, not Canadian dollar strength,” said Aaron Hurd, senior portfolio manager in the currency group at State Street Global.
“You have ongoing risk of tensions between Carney and Trump, the USMCA negotiations coming up this summer,” Hurd said. “With that risk on the horizon, unless Canadian economic data really takes off, I think the Canadian dollar is stuck here. It will move with the broad dollar.”
The United States-Mexico-Canada Agreement, which has shielded much of Canada’s exports from U.S. tariffs, is set for review by a July 1 deadline. Renewed verbal attacks from U.S. President Donald Trump are prompting Canadians to rally behind Prime Minister Mark Carney.
The Bank of Canada will keep its overnight interest rate on hold through 2026, according to an even stronger majority of economists polled by Reuters than one month ago, on expectations the economy will grow steadily with inflation largely contained.
Canadian retail sales increased by 1.3% in November from October and were up 3.1% on an annual basis. Preliminary estimates for December showed retail sales declining 0.5% and manufacturing sales up 0.5%.
The price of oil, one of Canada’s major exports, rose 2.7% to $60.98 a barrel on concerns of supply disruptions in the Middle East.
Canadian bond yields moved higher across the curve, with the 10-year up 2.9 basis points at 3.440%.
