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Canadian dollar pares weekly gain on global market volatility

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Source: Marijuana Moment

TORONTO — The Canadian dollar edged lower

against its U.S. counterpart on Friday, pulling back from an

earlier two-week high, as volatility in global equity markets

bolstered demand for the safe-haven greenback.

The loonie was trading 0.1% lower at 1.2832 to the

greenback, or 77.93 U.S. cents, after touching its strongest

since May 5 at 1.2777.

“What we are seeing in all of the volatility in markets in

recent days is that there is this safe-haven bid for the U.S.

dollar,” said Royce Mendes, director & head of macro strategy at

Desjardins.

The U.S. dollar climbed against a basket of major

currencies and U.S. stocks came close to confirming a bear

market, after major retailers contributed this week to fears

about a slowing economy.

Meanwhile, the price of oil, one of Canada’s major exports,

settled 0.9% higher at $113.23 a barrel as a planned European

Union ban on Russian oil countered growth concerns.

“The Canadian dollar seems to be detached from oil prices,”

Mendes said. “That’s not all that surprising given that we are

not hearing about much investment going into the ground in the

oil patch.”

Speculators have raised their bearish bets on the Canadian

dollar to the highest since October, data from the U.S.

Commodity Futures Trading Commission showed. As of May 17, net

short positions had increased to 14,496 contracts from 5,407 in

the prior week.

Still, the loonie gained 0.6% for the week, ending a losing

streak of seven straight weeks, after hotter-than-expected

Canadian inflation data on Wednesday raised pressure on the Bank

of Canada to tighten policy quickly.

Canadian bond yields fell across the curve in a shortened

session ahead of the Victoria Day holiday on Monday. The 10-year

was down 5 basis points at 2.832%, trading near a

three-week low.

(Reporting by Fergal Smith; Editing by Alison Williams and Ken

Ferris)

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