Canadian dollar slips but posts fourth straight weekly gain

The Canadian dollar edged lower against the U.S. dollar on Friday but maintained most of its weekly advance, as data showed Canada’s manufacturing sector grew in April at its fastest rate in nearly four years.

The loonie traded 0.1% lower at 1.3585 per U.S. dollar, or 73.61 U.S. cents, after moving between 1.3551 and 1.3593. For the week, the currency gained 0.6%, marking its fourth consecutive weekly advance.

The S&P Global Canada Manufacturing Purchasing Managers’ Index climbed to 53.3 last month from 50.0 in March, reaching its highest level since June 2022. The war in the Middle East led to stock building and contributed to inflation pressures.

Preliminary data released on Thursday indicated annualized growth of 1.7% in the first quarter, slightly above the Bank of Canada’s 1.5% forecast.

On Wednesday, the BoC stated that if oil prices remained elevated and started pushing up inflation, it might need to respond with consecutive interest rate hikes. Swap market data showed investors have priced in two rate increases this year.

Oil, a major Canadian export, retreated from recent gains after Iran submitted its latest proposal for negotiations with the United States. U.S. crude oil futures settled nearly 3% lower at $101.94 a barrel.

Canadian bond yields declined across the curve. The 10-year yield fell 1.3 basis points to 3.530%, extending its pullback from a one-month high of 3.623% reached on Wednesday.