Market News

By Fergal Smith

Summary

• Canadian dollar gains 0.7% against the greenback
• For the week, the currency was barely changed
• Retail sales increase 1.5% in June
• Bond yields fall across the curve

TORONTO, Aug 22 (Reuters) - The Canadian dollar recouped all of its weekly decline against the U.S. dollar on Friday as Federal Reserve Chair Jerome Powell opened the door to interest rate cuts and Canada made a move to ease trade tensions with the United States.
The loonie was trading 0.7% higher at 1.3815 per U.S. dollar, or 72.39 U.S. cents, putting the currency on track for its largest gain since May 23.

For the week, the loonie was barely changed after it was pressured on Tuesday by cooler-than-expected domestic inflation data that raised expectations the Bank of Canada would resume its easing campaign over the coming months.

"The CAD had been roughed up somewhat by the USD over the past few days but is heading into the end of the week on a solid rebound following cautiously dovish comments on the policy outlook by Fed Chair Powell at the Jackson Hole symposium," Shaun Osborne and Eric Theoret, strategists at Scotiabank, said in a note.

Powell pointed to a possible interest rate cut at the U.S. central bank's meeting in September but stopped short of committing to it,