C$ sees biggest weekly drop since April as stocks tumble

TORONTO (Reuters) - The Canadian dollar was little changed against its broadly stronger U.S. counterpart on Friday as data showed further recovery in Canada’s economy, with the currency steadying after a sharp decline earlier in the week.

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

The Canadian dollar CAD= was trading nearly unchanged at 1.3320 to the greenback, or 75.08 U.S. cents, having traded in a range of 1.3280 to 1.3348.

For the month it was also nearly unchanged, after falling since the start of the week by 1.5%, its biggest weekly decline since April.

The sell-off this week for the loonie is part of “a broader move that is linked to the equity pullback,” said Simon Côté, managing director, risk management solutions at National Bank Financial, adding that the currency’s decline encouraged many corporate clients to step into the market to hedge their U.S. dollar receivables.

Canada runs a current account deficit and is a major producer of commodities, including oil, so the loonie tends to be sensitive to the global flow of trade and capital.

Wall Street’s major indexes tumbled, dragged down by a slide in shares of tech heavyweights following their quarterly results, with a record rise in coronavirus cases and nerves over next week’s U.S. presidential election adding to a downbeat mood.

“The market doesn’t like uncertainty and to the extent that the election brings uncertainty it could shake the market again,” Côté said.

The safe-haven U.S. dollar .DXY rose against a basket of major currencies, while U.S. crude oil futures CLc1 settled 1.1% lower at $35.79 a barrel as rising COVID-19 infections heightened concerns over the demand outlook.

The Canadian economy grew by 1.2% in August, the fourth consecutive monthly gain, while a flash estimate showed further expansion of 0.7% in September.

Canadian government bond yields rose across the curve, with the 5-year CA5YT=RR up 3.8 basis points at 0.405%.

Reporting by Fergal Smith; editing by Jonathan Oatis and Pritha Sarkar