TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Friday after domestic data showed a surprise drop in factory sales, while the greenback climbed broadly on prospects of a U.S. tax overhaul.
Manufacturing sales fell 0.4 percent in October, pulled down by weak sales of autos and other transportation equipment. Analysts had forecast a 0.8 percent increase.The U.S. dollar <.dxy> rose 0.5 percent against a basket of major currencies on optimism a tax bill would be passed by year-end.The loonie got a boost on Thursday after Bank of Canada Governor Stephen Poloz said in a speech the central bank was increasingly confident the economy will need less stimulus over time, although the currency gave up some gains after dovish remarks by Poloz in a subsequent interview."Just looking at the way the Bank of Canada communicates, it's not as clear, for instance, as the Fed," said Eric Viloria, currency strategist at Wells Fargo. "That does contribute a bit more in the price swings in the Canadian dollar."The Bank of Canada is leaving the door open to further interest rate hikes in early 2018, making it clear that a number of uncertainties that could derail the economy, such as NAFTA renegotiation, are a reason for caution but not inaction.At 4 p.m. ET (2100 GMT), the Canadian dollar