TORONTO, June 12 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Friday as oil prices fell on signs of progress toward a peace deal in the Middle East, with the currency adding to its weekly decline.
The loonie was trading 0.1% lower at 1.3975 per U.S. dollar, or 71.56 U.S. cents, after moving in a range of 1.3959 to 1.3995. On Thursday, the currency touched its weakest level since November at 1.4023, while it was down 0.3% since the start of the week.
The Bank of Canada on Wednesday left its benchmark interest rate unchanged at 2.25% for a fifth straight time and said it was seeing limited evidence that higher energy prices were fueling broad-based inflation.
Investors were pricing in 24 basis points of tightening by the end of the year from the BoC, down from 37 basis points before Wednesday's rate decision, swap market data showed.
"The dovish communications from the Bank of Canada this week, as well as hopes that a U.S.-Iran peace deal is just round the corner, suggest the Bank of Canada will keep interest rates unchanged this year," Stephen Brown, chief North America economist at Capital Economics, said in a note.
The U.S. dollar was little changed against a basket of major currencies after sliding the previous day, as traders awaited confirmation that a deal in the Middle East could be imminent.
The price of oil, one of Canada's major exports, was trading 3.8% lower at $84.38 a barrel. Traffic through the Strait of Hormuz, which normally carries a fifth of global oil and liquefied natural gas shipments, has been extremely limited as a result of the war.
Canadian government bond yields were mixed across the curve, with the 10-year unchanged at 3.409%.
Reporting by Fergal Smith; Editing by Andrea Ricci
