By Fergal Smith
The Canadian dollar weakened against its U.S. counterpart on Friday as investors weighed uncertain prospects for Canada's economy, but the move was limited after expectations eased for Federal Reserve interest rate hikes.
The loonie FX_IDC:USDCAD was trading 0.1% lower at 1.42 per U.S. dollar, or 70.42 U.S. cents, edging closer to a recent 14-month low at 1.4248.
For the week, the currency barely changed after the U.S. declined to extend the United States-Mexico-Canada Agreement, as expected, seeking changes to the trade deal.
"Canadian growth remains underwhelming and USMCA uncertainty and risks seem likely to drag on for yet another few months," said Erik Nelson, a macro strategist at Wells Fargo Securities in London.
A Reuters poll showed the loonie will strengthen less than previously expected over the coming year as uncertain negotiations to revise USMCA weigh on the domestic economy, reducing the prospects of interest rate hikes from the Bank of Canada.
The U.S. dollar TVC:DXY was heading toward its biggest weekly loss in 12 weeks after Thursday's tepid U.S. jobs report cooled market expectations for near-term tightening by the Fed.
On Thursday, Canada announced plans to build a new oil pipeline from Alberta to the Pacific coast, which would give the world's fourth-largest oil producer greater capacity to export to Asia and ease its reliance on the United States.
The U.S. price of oil was up 0.1% at $68.78 a barrel as traders held on to hopes for a successful outcome from attempts to secure peace between the U.S. and Iran.
Home sales in the Greater Toronto Area, which includes Canada's most populous city, rose in June for a fourth straight month and prices increased, continuing the market's recovery following a slow start to the year.
The Canadian 10-year (CA10YT=RR) yield was little changed at 3.446%, after touching a three-week high during Thursday's session at 3.480%.