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Canadian dollar weakens 0.2% against the greenback
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For the week, the loonie ends up 0.4%
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Touches its strongest since Nov. 25 at 1.3323
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10-year yield touches a near four-week low
TORONTO, Jan 13 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Friday, but the currency kept much of its weekly gain on optimism about a sustained downturn in inflation that could encourage the Federal Reserve to turn less hawkish.
The loonie was trading 0.2% lower at 1.3390 to the greenback, or 74.68 U.S. cents, after touching its strongest level since Nov. 25 at 1.3323.
For the week, it strengthened 0.4%, its fourth consecutive weekly gain.
"The main focus is still on the USD, and CAD direction being driven by (moves in) equities," said Amo Sahota, director at Klarity FX in San Francisco. "The loonie, although stronger (this week), is not keeping up with the gains being seen in other major FX."
The U.S. dollar was trading near a seven-month low against a basket of major currencies, while a gauge of global stocks rose for a sixth straight session as investors assessed the start of U.S. earnings season and the path of inflation.
It follows U.S. data on Thursday that fueled hopes for a sustained downward trend in inflation, potentially giving the Fed room to scale down the size of its rate hikes.
Canada sends about 75% of its exports to the United States, including oil.
U.S. crude futures settled 1.9% higher at $79.86 a barrel, adding to this week's gains, helped by the prospect of less aggressive tightening by the Fed and signs of demand growth in top oil importer China.
Canadian consumer price index data for December, due Tuesday, could offer clues on the Bank of Canada policy outlook.
Canadian government bond yields were mixed across the curve on Friday. The 10-year touched its lowest level since Dec. 19 at 2.858% before recovering to 2.900%, little changed on the day. (Reporting by Fergal Smith; Editing by Richard Chang)
