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Canadian dollar pares weekly decline as stocks rebound

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·1 min read
FILE PHOTO: A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto
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TORONTO (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Friday as oil prices rose and Wall Street clawed back some recent losses, but the currency was on course to extend a string of weekly declines.

U.S. stock indexes rose at the end of a bumpy week marked by rising concerns over tighter monetary policy and slowing economic growth.

The price of oil, one of Canada's major exports, rose as the prospect of a European Union ban on Russian oil offset worries about faltering global demand.

U.S. crude prices rose 2.1% to $108.33 a barrel, while the Canadian dollar was trading 0.5% higher at 1.2982 to the greenback, or 77.03 U.S. cents.

The currency traded in a range of 1.2976 to 1.3049 after touching on Thursday its weakest intraday level in 18 months at 1.3076. For the week, it was on track to weaken 0.6%, its seventh straight weekly decline.

As Canada's economy overheats, the Bank of Canada is likely to be among the first of the major central banks to lift interest rates to a more normal setting even as worries persist about record-high levels of household debt, strategists say.

April inflation data, due next Wednesday, could provide clues on the outlook for higher rates.

Canadian government bond yields climbed across the curve, tracking the move in U.S. Treasuries. The 10-year was up 5.4 basis points at 2.955%, after touching on Thursday its lowest intraday level in 10 days at 2.887%.

(Reporting by Fergal Smith; Editing by Paul Simao)

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