Canadian dollar set for weekly gain as economy rebounds

TORONTO (Reuters) - The Canadian dollar edged up against its U.S. counterpart on Friday, with the currency holding onto this week's gains as a preliminary estimate showed Canada's economy rebounding in June.

The loonie was trading 0.1% higher at 1.2431 to the greenback, or 80.44 U.S. cents, after trading in a range of 1.2427 to 1.2472.

It was on track to advance for the second straight week, with a gain of 1%, as dovish remarks by the U.S. Federal Reserve took the steam out of a month-long rally for the U.S. dollar.

For the month, the loonie was down 0.3%.

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.

The price of oil, one of Canada's major exports, was also on track to post a weekly gain, with demand growing faster than supply and vaccinations expected to alleviate the impact of a resurgence in COVID-19 infections across the globe. U.S. crude prices were up 0.1% at $73.7 a barrel.

Canadian government bond yields were mixed across the curve, with the 10-year up half a basis point at 1.211%. The Canadian bond market is due to close early ahead of the Civic Holiday on Monday.

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