Canadian dollar clings to weekly gain as China injects liquidity
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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/File Photo
TORONTO (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Friday as the central bank of top commodity consumer China moved to calm markets, while Canada's 10-year yield climbed to a five-week high.
Copper prices rose after the People's Bank of China infused liquidity to ease nerves caused by property giant China Evergrande Group's debt woes.
Canada is a major exporter of commodities, including copper and oil. Copper rallied 1.5%, while oil gave back some of this week's gains, falling 1.2% to $71.74 a barrel. [MET/L] [O/R]
The Canadian dollar was trading 0.1% higher at 1.2670 to the greenback, or 78.93 U.S. cents, after trading in a range of 1.2637 to 1.2690. For the week, the loonie was on track to advance 0.1%.
Investors are awaiting a Federal Reserve interest rate decision next week and a Canadian federal election.
Foreign investors are growing more worried that Canada's election on Monday could result in a deadlock that hampers Ottawa's response to the COVID-19 pandemic and further slows the economic recovery from the crisis.
On Thursday, Fitch Ratings cut its 2021 growth forecast for the Canadian economy to 5% from 6.6%.
Fitch last year stripped Canada of one of its coveted triple-A credit ratings, but S&P Global Ratings and Moody's Investors Service still give Canadian debt the highest rating.
Canadian government bond yields were higher across a steeper curve, tracking the move in U.S. Treasuries.
The 10-year touched its highest level since Aug. 11 at 1.289% before dipping slightly to 1.282%, up 4.6 basis points on the day.
(Reporting by Fergal Smith. Editing by Jane Merriman)
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