CANADA FX DEBT-C$ firms as U.S. retail sales unexpectedly rise

Mon May 13, 2013 9:58am EDT

* C$ at C$1.0095 vs US$, or 99.06 U.S. cents
    * U.S. retail sales up 0.1 pct
    * Bond prices lower across the curve

    By Solarina Ho
    TORONTO, May 13 (Reuters) - The Canadian dollar was slightly
firmer against its U.S. counterpart on Monday, helped in part by
U.S. retail sales which unexpectedly rose in April.
    U.S. retail sales, which account for about 30 percent of
consumer spending, edged up 0.1 percent after a revised 0.5
percent decline in March. Economists polled by Reuters had
expected it to drop 0.3 percent. 
    "Retail sales have been supporting the Canadian dollar,
providing some more insight that the U.S. economy may be
slightly stronger than what was expected," said Charles
St-Arnaud, an economist and currency strategist in New York with
Nomura Securities.
    "It seems like we're going into a turn where indicators are
showing that the U.S. economy is probably not as bad as feared."
     The United States is Canada's largest trading partner and
stronger U.S. consumer spending is typically good for the
Canadian dollar and Canada.
    At 9:47 a.m. (1347 GMT), the Canadian dollar was trading at
C$1.0095 versus the U.S. dollar, or 99.06 U.S. cents, stronger
than Friday's close at C$1.0112, or 98.89 U.S. cents.
    The Canadian dollar was mostly outperforming against other
major currencies, including its commodities counterparts. It
touched its strongest level against the Australian dollar since
October 2012.
    St-Arnaud said the currency is expected to trade between
C$1.0060 and C$1.0140, though it was likely to have an overall
positive day. Still, commodities prices and equity markets were
mostly weaker, which could temper gains.
    Looking ahead, U.S. and Canadian inflation data on Thursday
and Friday will be this week's economic highlight. April
inflation is expected to rise a very tame 0.1 percent in Canada.
    Prices for Canadian government bonds were generally lower
across the curve. The two-year bond slipped 1.7
Canadian cents to yield 1.014 percent, while the benchmark
10-year bond lost 25 Canadian cents to yield 1.912
percent.
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