Canadian dollar steadies as oil rebounds in volatile trading

Fergal Smith
·2 min read
FILE PHOTO: A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto

By Fergal Smith

TORONTO (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Friday, steadying after a sharp decline the day before as oil rallied and domestic data showed retail sales falling less than expected in January.

The price of oil, one of Canada's major exports, rose in volatile trading after a sell-off earlier in the week erased about 7% from prices as a new wave of coronavirus infections across Europe dampened expectations of any imminent recovery in fuel demand. U.S. crude oil futures settled 2.4% higher at $61.42 a barrel.

"The oil move was quite instrumental yesterday," said Amo Sahota, director at Klarity FX in San Francisco. "Today, it has been a lot more orderly ... I think that's helping keep the loonie in check."

The Canadian dollar was trading nearly unchanged at 1.2491 to the greenback, or 80.06 U.S. cents, having traded in a range of 1.2461 to 1.2547.

The loonie has pulled back from its strongest intraday level in three years at 1.2361 on Thursday, while it was on track to decline 0.1% for the week.

Canadian retail sales fell by 1.1% in January from December as provincial governments began re-introducing health restrictions to combat a resurgence of coronavirus cases, Statistics Canada said.

Still, analysts had forecast a decline of 3%, while sales were estimated by Statistics Canada to rebound 4% in February.

Wall Street edged higher as U.S. Treasury yields took a break from a recent surge. Investors have worried that the recent move higher in long-term rates could crimp global economic recovery.

Canadian government bond yields were lower across a flatter curve, with the 10-year down 1.9 basis points at 1.588%. On Thursday, it touched its highest intraday level since January last year at 1.677%.

(Reporting by Fergal Smith; Editing by Kirsten Donovan and Nick Zieminski)