TORONTO (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Friday as oil fell and the greenback extended its recovery against a basket of currencies, but the loonie remained on track to score its biggest weekly gain since early December.
U.S. crude CLc1 prices were down 1.15 percent at $53.16 a barrel, giving up gains from earlier in the day, as the market shifted its focus towards production increases in the United States from efforts by OPEC and other producers to support prices by cutting output. [O/R]
Oil is one of Canada’s major exports.
The U.S. dollar .DXY pared some gains after data showed U.S. economic growth slowed sharply in the fourth quarter. Still, steady consumer spending and rising business investment suggested the economy would continue to expand.
At 9:32 a.m. ET (1432 GMT), the Canadian dollar CAD=D4 was trading at C$1.3111 to the greenback, or 76.27 U.S. cents, slightly weaker than Thursday's close of C$1.3098, or 76.35 U.S. cents.
The currency’s strongest level of the session was C$1.3085, while its weakest was C$1.3131.
The loonie was on course to gain 1.6 percent this week, its biggest gain since the week ended Dec. 2, using Reuters data, as investor fears of a more unfavorable trade outlook for Canada abated and after U.S. President Donald Trump signed orders on Tuesday smoothing the path for the Keystone XL oil pipeline.
If built, the pipeline from Alberta to Nebraska would yield about $2.4 billion (C$3.2 billion) a year for Canada, split between government revenues, shareholder profits and re-investment into the still-recovering Canadian oil patch, according to a Conference Board of Canada research note prepared for Reuters on Thursday.
Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries after the U.S. economic data.
On Thursday, the 10-year yield had touched a nearly six-week high at 1.851 percent.
Reporting by Fergal Smith; Editing by Meredith Mazzilli
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