Fergal Smith

TORONTO (Reuters] – On Friday the Canadian dollar fell against its U.S. counterpart, regaining some of last week’s gains. The potential Russian invasion on Ukraine triggered a saleoff in risk-sensitive assets.

Wall Street fell and safe-havens like U.S. Treasuries or the U.S. Dollar rallied following Washington’s statement that Russia had enough troops close to Ukraine to launch an invasion.

Amo Sahota (director at Klarity FX San Francisco) said that “it’s a flee to safety trade, and that always works for the U.S. dollars.”

“I am a bit concerned that there are open positions throughout the weekend.”

After trading between 1.2670 and 1.2754, the Canadian dollar traded 0.2% lower at 1.2742 against the greenback. That’s 78.78 U.S. Cents. The week’s gain was 0.2%.

Still, the loonie fell much less than the other currencies, due to fears about tight oil supply, which is Canada’s largest export. Oil futures closed 3.6% higher at $93.10 per barrel.

Canada’s Ontario Province declared a state-of-emergency and threatened to arrest protestors who had been blocking an important U.S. border corridor for the past four days.

According to analysts, although disruptions to trade might impact Canadian economic activity during the first quarter of the year, they are unlikely to prevent the Bank of Canada raising interest rates next month.

Desjardins head of macro strategies, Royce Mendes stated that “the latest disruptions will increase prices and cause shortages in some goods.” Inflation and inflation expectations will guide monetary policy.”

The curve showed that Canadian government bonds yields dropped across the board, in line with the U.S. Treasuries move. The 10-year fell 7.6 basis point to 1.861.