C$ dips but on track to post biggest weekly gain in 5 months

TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Friday as the greenback rose broadly, but the loonie was on course for its best weekly performance in five months.

A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. REUTERS/Mark Blinch

At 9:15 a.m. (1315 GMT), the Canadian dollar was trading 0.2 percent lower at C$1.3020 to the greenback, or 76.80 U.S. cents.

The currency, which touched on Thursday its strongest in two weeks at C$1.2976, traded in a range of C$1.2984 to C$1.3027.

The loonie has been boosted this week by higher oil prices and optimism that a deal to renew the North American Free Trade Agreement will be reached. It has climbed 1.1 percent since the start of the week, the most since April.

The price of oil, one of Canada’s major exports, was modestly higher on Friday after falling by the most in a month in the previous session, as the focus returned to supply concerns ahead of a November deadline for U.S. sanctions on Iranian crude.

U.S. crude prices were up 0.5 percent at $68.92 a barrel.

The U.S. dollar gained against a basket of other major currencies as U.S. retail sales rose less than forecast in August, but revised higher readings on July sales supported the view of solid economic expansion in the third quarter.

The ratio of Canadian household debt to income widened to 169.1 percent in the second quarter from an upwardly revised 168.3 percent in the first quarter, Statistics Canada said.

The Bank of Canada has worried that historically high household indebtedness could weigh on the economy as interest rates rise. Money markets expect the central bank to raise rates once more this year.

Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries. The 10-year declined 28 Canadian cents to yield 2.360 percent.

The 10-year yield touched its highest intraday since Aug. 8 at 2.365 percent.

Reporting by Fergal Smith; Editing by Steve Orlofsky