July 24, 2020 / 1:47 PM / 18 days ago

C$ eases vs U.S. dollar; set to finish week up about 1%

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

(Reuters) - The Canadian dollar eased against its U.S. counterpart on Friday, but was set to finish the week about 1% higher, as the U.S. currency remained broadly weaker, weighed down by American economic uncertainty as coronavirus cases rise and U.S.-China relations further deteriorate.

The Canadian dollar CAD= was at C$1.3425 to the greenback, or 74.49 U.S. cents, weaker than Thursday’s close of C$1.3407, or 74.59 U.S. cents.

The loonie remained close to a six-week high hit on Thursday.

“To a large extent though, the CAD is still the tail of the FX dog and, with no domestic data ahead until next Friday’s GDP report, the CAD will remain a slave to USD flows, crude oil, and the broader market tone,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.

The U.S. dollar fell against the Japanese yen on Friday after China’s foreign ministry told the U.S. embassy early on Friday to close its consulate in the city of Chengdu, after Washington ordered the closure of the Chinese consulate in Houston.

The greenback also slipped against the euro after a survey showed euro zone business activity bounced back to growth in July. Separately, data showed U.S. business activity increased to a six-month high in July, but companies reported a drop in new orders as a resurgence in new COVID-19 cases across the country weighed on demand.

The loonie, which has been helped in recent sessions by rising oil prices, found little of that support on Friday as oil prices were nearly flat on the day.

On Friday, Canadian government bond prices were little changed on the day. The two-year CA2YT=RR yield was at 0.282% down from 0.285% late on Thursday, while the benchmark Canadian 10-year CA10YT=RR yield was at 0.504% up from 0.503%.

Reporting by Saqib Iqbal Ahmed; editing by Jonathan Oatis

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