TORONTO, Nov 13 (Reuters) - The Canadian dollar remained on track for a weekly decline against its US counterpart on Friday as recent widening in the gap between US and Canadian yields weighed on the currency, and ahead of key domestic inflation data.
The loonie was trading nearly unchanged at 1.4257 per US dollar, or 70.14 US cents, after moving in a range of 1.4229 to 1.4270.
On Thursday, the currency touched a 19-month low at 1.4331, while it was headed for a weekly decline of 0.9%.
"The CAD has struggled to resist the USD’s inroads this week," Shaun Osborne and Eric Theoret, strategists at Scotiabank, said in a note, adding that recent widening in yield spreads at the front of the curve was "punishing" for the loonie.
The Canadian 2-year yield has fallen about 20 basis points further below its US equivalent since the start of November to a gap of 147 basis points, as Canada's economy shed jobs for a third straight month and after US inflation data bolstered expectations for Federal Reserve interest rate hikes.
The US dollar was on track for its strongest weekly rise in two months against a basket of major currencies.
US Treasury Secretary Scott Bessent said he believed the US would secure trade deals with Mexico and Canada. Canada sends about 70% of its exports to the US, including oil.
US crude futures fell 0.5% to $88.30 a barrel and were set for a second straight weekly decline as Washington's focus on blockading Iran and ramping up other economic pressures allayed fears of renewed direct conflict.
Canadian inflation data for October, due on Monday, could guide expectations for Bank of Canada interest rate hikes. A slight acceleration in the annual rate of consumer price growth to 3.2% was forecast by economists.
Investors see a 66% chance the Bank of Canada would raise interest rates in December. That's up from 40% at the start of the week as the market priced in more aggressive tightening from the Fed.
The Canadian 10-year bond yield rose 4.7 basis points to 3.857%, trading at its highest level in more than two weeks.
Reporting by Fergal Smith; Editing by Kirsten Donovan
