Canadian dollar pares weekly gain as Ukraine tensions soar By Reuters

By Fergal Smith

TORONTO (Reuters) – The Canadian dollar weakened against its U.S. counterpart on Friday, giving back some of this week’s gains, as the potential for an imminent Russian attack on Ukraine triggered a selloff in risk-sensitive assets.

Wall Street tumbled and safe-havens such as U.S. Treasuries and the U.S. dollar rallied after Washington said Russia has massed enough troops near Ukraine to launch a major invasion.

“It’s a flight to safety trade and that always works in favor of the U.S. dollar,” said Amo Sahota, director at Klarity FX in San Francisco.

“I would be a little concerned about having open positions over the course of the weekend.”

The Canadian dollar was trading 0.2% lower at 1.2742 to the greenback, or 78.78 U.S. cents, after trading in a range of 1.2670 to 1.2754. For the week, the was up 0.2%.

Still, the loonie fell by much less than some other currencies on Friday, as escalating Ukraine tensions added to concern about tight supply in the market for oil, one of Canada’s major exports. oil futures settled 3.6% higher at $93.10 a barrel.

Meanwhile, Canada’s Ontario province declared a state of emergency and threatened to fine and jail protesters who have been blocking a key U.S. trade corridor for four days.

The disruption to trade could weigh on Canadian economic activity in the first quarter but is unlikely to derail an interest rate hike next month by the Bank of Canada, say analysts.

“The latest disruptions will raise prices and lead to shortages of some goods,” said Royce Mendes, head of macro strategy at Desjardins. “Monetary policy will be guided by inflation and inflation expectations.”

Canadian government bond yields fell across the curve, tracking the move in U.S. Treasuries. The 10-year was down 7.6 basis points at 1.861.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.