FILE PHOTO: A Canadian Loonie, otherwise known as a one dollar coin, is displayed on top of an American one dollar bill in this posed photograph in Toronto. REUTERS/Mark Blinch TORONTO - The Canadian dollar strengthened against its U.S. counterpart on Friday as oil prices rose and the market took stock of recent losses for the currency, but the move was limited following the recent move in yield spreads in favor of the greenback.
Still, it was trading not far from a five-month low that it hit on Tuesday, at 1.3846, following the release of softer-than-expected domestic consumer price index data."The Canadian dollar coming back somewhat is simply technical from an oversold market," said Michael Goshko, senior market analyst at Convera Canada.
"We saw interest rate spreads between Canada and the U.S. just absolutely widen out," Goshko said. "That definitely had a negative impact on the Canadian dollar.... "It's going to be hard for Canada to gain much ground." The price of oil, one of Canada's major exports, pared its earlier gains after Iran played down a reported Israeli attacks on its soil, in a sign that an escalation of hostilities in the Middle East might be avoided. Still, U.S. crude oil futures were up 0.7% at $83.27 a barrel.