By Fergal Smith
TORONTO (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Friday as oil prices fell and investors weighed prospects for a U.S. coronavirus relief package, with the loonie giving back some of this week's gain.
The Canadian dollar
"The CAD has made modest progress against a generally softer USD this week but the broader (market) backdrop is unsettled," Scotiabank strategists, including Shaun Osborne, said in a note.
"The broader risk backdrop appears fragile following September's big reversal in stocks and with U.S. equities perhaps vulnerable as U.S. lawmakers dither on fiscal stimulus," the strategists said.
Wall Street's main indexes seesawed as investors fretted over an impasse in Washington on the new coronavirus aid bill, while turning cautious ahead of the Nov. 3 presidential election.
Canada sends about 75% of its exports to the United States, including oil. U.S. crude oil futures (CLc1) settled 1.6% lower at $41.77 a barrel, while the U.S. dollar (DXY) fell against a basket of major currencies, including the euro, after data showed Germany's manufacturing sector expanding at a faster rate.
Canadian manufacturing sales last month most likely rose by 1.5% after falling 2.0% in August, Statistics Canada said in a flash estimate. A separate flash estimate showed wholesale sales increasing by 0.4% after rising 0.3% in August.
The Bank of Canada is due to update its economic outlook next week.
Canadian government bond yields eased across the curve in sympathy with U.S. Treasuries on Friday. The 10-year (CA10YT=RR) fell 1.5 basis points to 0.643%, pulling back from an earlier eight-week high at 0.680%.