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Canadian dollar weakens for second straight week as stocks fall

Fergal Smith
·2 mins read
A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto
A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto

By Fergal Smith

TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Friday as a sell-off in technology shares weighed on investor sentiment and domestic data showed a drop in underlying retail sales, with the loonie falling for the second straight week.

The Canadian currency <CAD=> was trading 0.2% lower at 1.3193 to the greenback, or 75.80 U.S. cents, having traded in a range of 1.3137 to 1.3208. For the week, the loonie was down 0.1%.

"I think it is just a reflection of broad market risk," said Bipan Rai, North America head of FX strategy at CIBC Capital Markets. "The Canadian dollar this year has taken its cue from what's been going on outside its borders."

U.S. stocks turned lower in volatile trading as worries about rising coronavirus cases and a patchy economic recovery dampened risk sentiment, with technology-related stocks reversing early gains to extend their declines to a third consecutive day.

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> settled 0.3% higher at $41.11 a barrel, extending this week's rally after Saudi Arabia pressed allies to stick to production quotas.

Canadian retail and wholesale sales both rose in July and were higher than before the coronavirus pandemic struck, Statistics Canada said, pointing to further evidence of a partial economic recovery.

Still, the 0.6% gain for retail sales was much more modest than the advance in June, while core retail sales, which exclude sales at motor vehicle and parts dealers and gasoline stations, declined 1.2%.

Canadian government bond yields edged higher across the curve, with the 10-year <CA10YT=RR> up half a basis point at 0.578%.

(Reporting by Fergal Smith; Editing by Paul Simao)