The Canadian dollar rallied against the greenback on Friday as domestic data eased fears about a weak housing market and after a bet by Warren Buffett on one of Canada’s major energy companies that could boost sentiment in the country’s oil patch.
Buffett’s Berkshire Hathaway Inc. said on Thursday it had taken a fresh stake in Suncor Energy Inc for the second time in about six years, sending the company’s shares nearly four per cent higher on Friday.
“Warren Buffett planting his flag in the Canadian oil patch is a promising sign that we may have reached a bottom in Canadian energy,” said Adam Button, chief currency analyst at ForexLive.
The Bank of Canada expected in January investment in the energy sector to contract because of low oil prices and production curtailments in Alberta, as it signaled the pace of future interest rate hikes could be more gradual.
The central bank also worried about a weak housing market, after activity slowed at the end of 2018.
Data on Friday from the Canadian Real Estate Association showed home sales in January remained below levels posted one year ago, but that activity rose 3.6 per cent from December.
The housing data was better than expected and “calmed the nerves” of investors, Button said.
The Canadian dollar trading 0.4 per cent higher Friday at 1.3246 to the greenback, or 75.49 U.S. cents.
The currency on Thursday touched its weakest intraday level in nearly three weeks at 1.3340, but still finished the week up 0.3 percent.
Gains for the loonie came as stocks were boosted by rising hopes the United States and China can hammer out an agreement resolving their protracted trade war.
Canada is a major producer of commodities, including oil, so its economy could benefit from reduced global economic uncertainty.
Data from Statistics Canada showed foreign investors sold a net $18.96-billion in Canadian securities in December, led by a record divestment in bonds. This was the highest divestment since October, 2007.
Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The 10-year fell 16 Canadian cents to yield 1.895 per cent.
Canada’s bond market will be closed on Monday for the Family Day holiday.