Canadian dollar weakens as oil falls, investors brace for Poloz

Fri Jan 27, 2017 5:39pm EST
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By Fergal Smith

TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Friday as oil fell and investors braced for a speech next week by Bank of Canada Governor Stephen Poloz, while the greenback extended its recovery against a basket of major currencies.

The U.S. dollar .DXY rose for a second straight day on the view that it would gain from a rise in border tariffs, tax reform and future stimulus spending.

"I still think the market is looking for dollar-CAD to try and resume its upside and maybe there is a little bit of position squaring going on looking forward to next Tuesday's Canadian GDP (gross domestic product) data and the Bank of Canada Governor Poloz speaking as well," said Amo Sahota, director at Klarity FX.

"Poloz is the wildcard out here and the market expects him to retain his dovish commentary and maybe get a bit more bang for his buck on trying to talk the currency down."

U.S. crude oil futures CLc1 settled 61 cents lower at $53.17 a barrel after data suggested drilling is ramping up in the United States. [O/R]

Oil is one of Canada's major exports.

Speculators turned bullish on the Canadian dollar for the first time since September, data from the Commodity Futures Trading Commission and Reuters calculations showed. Canadian dollar positions swung to net long 2,519 contracts as of Jan. 24 from net short 5,456 contracts a week earlier.

The Canadian dollar CAD=D4 ended at C$1.3138 to the greenback, or 76.12 U.S. cents, weaker than Thursday's close of C$1.3098, or 76.35 U.S. cents.   Continued...

Canadian Loonies, otherwise known as a one dollar coin, are displayed on top of an American currency in this posed photograph in Toronto, October 10, 2008. REUTERS/Mark Blinch