TORONTO (Reuters) - The Canadian dollar retreated against its U.S. counterpart on Friday after touching a year-high this week, as the greenback climbed broadly amid a risk-off tone in global markets.
The euro fell against the U.S. dollar on revived worries about Europe’s fiscal stability, while oil prices sank after touching 3-1/2 year highs and the stronger greenback weighed on gold prices.
“Equities are lower; commodities are lower, led by crude oil being down by two bucks. That, combined with the broader base U.S. dollar bid, has contained the dollar/Canada move today and positions are being squared against the weekend,” said Jack Spitz, managing director of foreign exchange at National Bank Financial.
The Canadian dollar ended at C$0.9886 versus the U.S. dollar, or $1.0115, down from Thursday’s North American finish at C$0.9859 versus the U.S. dollar, or $1.0143.
The only key economic data point of note for Canada was fourth-quarter growth data, but that failed to push the currency significantly in either direction, market observers said.
Canadian economic data showed growth had fallen to an annualized 1.8 percent in the fourth quarter from an upwardly revised 4.2 percent in the third, leaving the Bank of Canada with room to keep interest rates at historic lows.
The growth rate was exactly as expected in a Reuters survey of analysts but fell short of the 2.0 percent the Bank of Canada had predicted in its January Monetary Policy Report.
“The GDP showed softer growth in Canada and the data was not sufficient to break the bias for a U.S. dollar bid or take the Canadian dollar out of its consolidated trading range,” said Spitz, referring to levels of C$0.9850 to C$0.9900 against the greenback.
Camilla Sutton, chief currency strategist at Scotia Capital, said the data was pretty much expected and overall growth is still fairly modest.
“There’s nothing in the data release that would be concerning. I think that’s positive, but it’s likely a CAD neutral,” she said.
Still, the Canadian dollar appreciated about 1 percent against the greenback for the week, according to Thomson Reuters data. The gains came on the back of a huge cash injection by the European Central Bank to stabilize the region’s financial problems, along with solid U.S. labor market data and a generally elevated oil prices.
On Thursday, the currency hit C$0.9942 to the U.S. dollar, or $1.0161, its strongest level since September 19.
“The Canadian dollar is higher across the board on the crosses. Much of that has to do with the month-end flows that hit the market two days ago. The Canadian dollar was a star performer,” said Spitz, referring to the currency’s performance for the week.
Canadian bond prices edged higher across the curve, with the two-year bond up 3 Canadian cents to yield 1.108 percent. The 10-year bond gained 35 Canadian cents to yield 1.965 percent.
Additional reporting by Claire Sibonney; editing by Rob Wilson