C$ strengthens as oil prices rebound, Brexit fears abate

Fri Jun 17, 2016 5:11pm EDT
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By Alastair Sharp

TORONTO (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Friday as a selloff in oil and stocks ahead of Britain's EU membership vote next week abated, although gains for the loonie were limited by domestic data that showed slowing inflation.

The currency lost 0.9 percent of its value against the greenback over the course of the week, with much of the weakness attributed to worries that Britain will leave the bloc, which would send a shockwave through global financial markets.

"The Canadian dollar's not immune to the global impact of Brexit, certainly we'll get caught up in some of the volatility," said Blake Jespersen, managing director of foreign exchange sales at BMO Capital Markets.

"I think it's going to be a very close vote and it's really too close to call at this point," he said.

The British pound and bond yields rose on Friday as the murder of a pro-EU British lawmaker a day earlier was seen potentially tipping the scales back in favor of a vote to remain.

The Canadian dollar CAD=D4 settled at C$1.2878 to the greenback, or 77.65 U.S. cents, stronger than Thursday's close of C$1.2961, or 77.15 U.S. cents.

Oil prices jumped 4 percent, which Jespersen said was likely also driven by a change in sentiment on the Brexit risk.

"I don't think any one asset class is going to break away on fundamentals until we get through this vote," he said.   Continued...

A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015.  REUTERS/Mark Blinch