The Canadian dollar on Friday was moving towards completing a five-week series of declines against the US currency. This was facilitated by the weakening of the US dollar and rising oil prices.
The Canadian dollar on Friday was close to ending a five-week streak of declines against the US dollar. This was aided by the weakening of the American currency and rising oil prices, as investors revised expectations for US rates.
During the morning session the Canadian dollar traded around the 1.4170 mark per US dollar, corresponding to 70.57 US cents. Over the day the American currency weakened by about 0.13% against the Canadian one.
The weakening of the US dollar helped the Canadian currency recover after the release of Canadian employment data last week. These data reduced expectations of a Bank of Canada rate hike and drove the Canadian dollar to an 18-month low.
The US dollar was heading for a weekly decline against several major currencies. Comments by Federal Reserve Chairman Kevin Warsh reinforced expectations that regulators might keep rates unchanged at the October meeting. A weaker US dollar makes the purchase of Canadian currency cheaper for investors.
Oil prices also provided support. Over the week they rose about 1.4% to 106.28 dollars per barrel, while another grade gained 6.4% to 97.78 dollars amid concerns over supply disruptions in the Middle East and declining US inventories.
Canada is a major energy exporter, so the Canadian dollar is sensitive to changes in oil prices. However, broader US dollar moves and rate expectations may dampen the impact of oil quotes.
The Canadian dollar fell about 0.6% from the close on October 9 at 1.4257, putting it on track for a weekly gain of around 0.6%. This would mark a reversal after a 0.2% drop the previous week, when the Canadian currency posted its fifth consecutive weekly decline.
Investors were also assessing new US inflation data. Producer prices rose 1.3% in September—the largest monthly increase in four and a half years. This heightened concerns that high energy costs could keep inflationary pressure persistent.