CANADA FX DEBT-C$ weakens to six-week low after soft retail data

Thu Aug 22, 2013 9:52am EDT

* C$ at C$1.0513 vs US$, or 95.12 U.S. cents
    * Canadian retail sales fall by a larger-than-expected 0.6
percent

    By Solarina Ho
    TORONTO, Aug 22 (Reuters) - The Canadian dollar slipped to
its weakest level in six weeks against its U.S. counterpart on
Thursday, pressured in part by softer-than-expected Canadian
retail sales data.
    Retail sales fell by 0.6 percent in June after a 1.8 percent
gain in May, foreshadowing a greater fall in gross domestic
product than initially thought, according to Statistics Canada
data. Economists had expected sales to fall 0.4
percent. 
    The U.S. dollar also extended gains as Wednesday's release
of the Federal Reserve's July policy meeting minutes did not
alter market expectations that the central bank will begin
scaling back its stimulus program next month. 
    "A September taper has become the global view ... the wider
narrative we've always talked about is that this does lead to
objective U.S. dollar strength and Canada gets caught in the
crossfire," said David Tulk, chief Canada macro strategist at TD
Securities.
     "The other part that makes CAD (the Canadian dollar) an
especially poor performer even on the crosses is just looking at
some of the weakness that we have in the Canadian data and that
came out from today's retail sales report."
    The Canadian dollar was trading at C$1.0513 versus
the greenback, or 95.12 U.S. cents. This was softer than
immediately before the data and weaker than Wednesday's North
American finish C$1.0473, or 95.48 U.S. cents.
    The currency, which was underperforming most of its key
counterparts except for the Japanese yen and the
British pound, briefly touched C$1.0517 to the U.S.
dollar, or 95.08 U.S. cents, after the figures were released.
This was its weakest level since July 10.
    In the United States, the number of Americans filing new
claims for unemployment benefits rose last week, but held close
to a six-year low and gave a positive signal for hiring during
the month. 
    The price of Canadian government debt mostly rose across the
maturity curve, though long-term bonds yields earlier in the
session did touch their highest levels in more than two years.
    The two-year bond rose 2 Canadian cents to yield
1.208 percent, while the benchmark 10-year bond 
added 1 Canadian cent to yield 2.754 percent.
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