CANADA FX DEBT-Canadian dollar extends weekly losing streak as interest rate spreads widen

By Fergal Smith

TORONTO, Oct 2 (Reuters) - The Canadian dollar added to its weekly decline against the US dollar on Friday as oil prices fell and interest rate spreads between the US and Canada continued to widen.

The loonie was trading 0.3% lower at 1.4257 per US dollar, or 70.14 US cents, after moving in a range of 1.4202 to 1.42595. On Thursday, the currency touched an 18-month low at 1.4263.

• For the week, the loonie was down 0.8%, which would be its fourth straight weekly decline, as the greenback extended recent gains against a basket of major currencies.

• "Rising oil prices and concerns that inflation could remain stubborn have put pressure on global central banks to take a more hawkish stance," said Sarah Ying, head of foreign exchange strategy at CIBC Capital Markets.

• "The US is still believed to be relatively better off relative to the rest of the world, and fiscal concerns in Europe are leaving little alternative other than to flock to the greenback," she said.

• US job growth slowed more than expected in September and the nonfarm payrolls count for the prior two months was revised sharply lower, almost taking another interest rate hike from the Federal Reserve this month off the table.

• Still, the Canadian 2-year yield fell 4 basis points further below the equivalent US rate to a gap of about 157 basis points, its widest since February 2025.

• The US price of oil, one of Canada's major exports, gave back some of the previous day's advance as Group of Seven countries agreed on the release of 100 million barrels of diesel and crude oil from emergency reserves. US crude oil futures were trading 1.6% lower at $91.40 a barrel.

• The Canadian 10-year yield was up nearly 1 basis point to 3.940% but remained below a nearly three-year high touched during Thursday's session at 4.042%.