CANADA FX DEBT-C$ hits session high after strong retail sales

Thu Dec 20, 2012 9:40am EST

* C$ hits session high of C$0.9875 vs US$, or $1.0127
    * Canada October retail sales stronger than expected
    * Bond prices climb across the curve

    By Claire Sibonney
    TORONTO, Dec 20 (Reuters) - Canada's currency touched a
session high against its U.S. counterpart on Thursday after data
showed domestic retail sales jumped much more than expected. 
    Following the data, the Canadian dollar 
strengthened to C$0.9875 versus the greenback, or $1.0127,
compared with C$0.9890, or $1.0111, before the release.
    Canada retail sales in October climbed 0.7 percent from
September to a record C$39.45 billion ($39.85 billion), thanks
to higher sales at motor vehicle dealers and gas stations.
 
    Greg Moore, FX Strategist at TD Securities, said that ahead
of the retail sales numbers, the market hadn't expected a big
reaction from the Canadian dollar, as the focus had been more on
uncertainty surrounding the U.S. budget crisis.
    "That would be the case unless we saw a pretty significant
surprise," said Moore. "This (strong retail sales) was higher
than pretty much all forecasters were expecting."
    At 9:20 a.m. (1420 GMT), the currency eased back to
C$0.9880, or $1.0121, little changed from Wednesday's North
American session close at C$0.9881, or $1.0120.
    Moore noted near-term U.S. dollar resistance versus Canada's
around C$0.9900 and support around C$0.9825-30.
    In other data, the U.S. economy grew faster than previously
estimated in the third quarter as exports and government
spending provided a lift, but that boost is likely to be lost
amid slowing global demand and a move towards tighter fiscal
policy. 
    Meanwhile, the number of Americans filing new claims for
unemployment aid rose last week, putting them back at the lower
end of their pre-storm range and suggesting job growth remains
moderate. 
    Investors were looking to book profit ahead of the holidays
following a recent rally to two-month highs, while optimism over
a resolution to the U.S. "fiscal cliff" of automatic tax hikes
and spending cuts in 2013 also eased after the latest setback in
U.S. fiscal talks. 
    Canadian government bond prices climbed across the curve.
The two-year bond was up 2 Canadian cents, yielding
1.133 percent, while the benchmark 10-year bond lost
5 Canadian cents to yield 1.850 percent.
FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.