TORONTO (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Friday, adding to this week’s gains as oil prices rose and U.S. stocks climbed back to near record highs.
The S&P 500 moved within a percent of September’s record closing high after the largest U.S. bank soothed worries that the first-quarter earnings season would pour cold water on Wall Street’s big rally back from last year’s slump.
Canada is a major exporter of commodities, including oil, so its currency tends to benefit from the positive signal higher stock prices send about the outlook for the global economy.
“On the back of (U.S.) dollar weakness and a better risk tone, the loonie is getting a little bit of a bid,” said Erik Nelson, a currency strategist at Wells Fargo.
The U.S. dollar declined against a basket of major currencies, while oil prices rose as involuntary supply cuts from Venezuela, Libya and Iran supported perceptions of a tightening market. U.S. crude oil futures settled 0.5% higher at $63.89 a barrel. [O/R]
At 3:58 p.m. (1958 GMT), the Canadian dollar was trading 0.4% higher at 1.3329 to the greenback, or 75.02 U.S. cents. The currency, which was up 0.5% for the week, traded in a range of 1.3313 to 1.3386.
The loonie made ground despite data showing Canadian home prices fell in March for the sixth straight month.
Data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed that speculators have cut their bearish bets on the Canadian dollar. As of April 9, net short positions had dipped to 43,202 contracts from 44,323 in the prior week.
Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries.
The two-year fell 8.5 Canadian cents to yield 1.633% and the 10-year was down 54 Canadian cents to yield 1.784%, its highest yield since March 12.
Reporting by Fergal Smith; editing by Grant McCool