Canadian dollar pulls back from 11-day high as greenback rallies

TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Friday, pulling back from an earlier 11-day high as the greenback broadly climbed and domestic data showed a drop in manufacturing sales.

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

The U.S. dollar .DXY limped back from a three-year low against a basket of currencies but still marked its fifth weekly loss out of seven weeks this year.

“Canada is getting pulled around by the broader (U.S.) dollar move,” said Blake Jespersen, managing director, foreign exchange sales at BMO Capital Markets. “Canadian fundamentals aren’t really shining through at the moment.”

Canadian factory sales slipped 0.3 percent in December after recording a huge jump in November, pulled down by weakness in petroleum and coal products as well as food manufacturing, Statistics Canada said.

Speculators cut bullish bets on the Canadian dollar for the first week in six, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed. As of Feb. 13, net long positions had fallen to 32,529 contracts from 40,164 a week earlier.

At 4 p.m. EST (2100 GMT), the Canadian dollar CAD=D4 was trading 0.6 percent lower at C$1.2557 to the greenback, or 79.64 U.S. cents.

The currency’s weakest level of the session was C$1.2567, while it touched its strongest level since Feb. 5 at C$1.2451.

For the week, the commodity-linked loonie was headed for a 0.2 percent gain. It fell 1.2 percent last week, when global stocks had slumped.

Wall Street squeezed out a gain on Friday to extend this week’s rebound.

The price of oil, one of Canada’s major exports, also climbed. U.S. crude oil prices settled 0.6 percent higher at $61.68 a barrel.

In separate data, foreign investment in Canadian securities slipped slightly in December after five strong months but international demand over the year was high enough to set an annual record.

Canadian government bond prices were higher across a flatter yield curve, with the two-year CA2YT=RR up 5 Canadian cents to yield 1.823 percent and the 10-year CA10YT=RR rising 45 Canadian cents to yield 2.319 percent.

The gap between Canada’s 2-year yield and its U.S. equivalent widened by 3.6 basis points to a spread of -37.1 basis points, its widest since June 27.

Reporting by Fergal Smith; Editing by Nick Zieminski and Sandra Maler