CANADA FX DEBT-C$ steady; focus turns to retail sales
* Canadian dollar at C$1.0736 or 93.14 U.S. cents * Bond prices rise, 10-year yield at more than 1-year low (Adds details, quotes, updates prices) By Leah Schnurr TORONTO, July 22 (Reuters) - The Canadian dollar was little changed against the greenback on Tuesday as a lack of domestic economic catalysts left the currency churning in a tight range, despite the re-emergence of some cautious risk appetite in global markets. Data that showed the U.S. consumer price index increased 0.3 percent in June pressured the loonie earlier in the day as it helped lift the U.S. dollar, but the impact proved to be short lived. "That was the initial catalyst and then really the market, in the absence of a material move, just unwound the short-term profits and went back to a neutral range, mirroring that of yesterday," said Gareth Sylvester, director at Klarity FX in San Francisco. Sentiment in financial markets around the world turned more optimistic on Tuesday after a spike in tensions in Ukraine and the Middle East on Monday had sent investors looking for safe havens. Still, markets were not yet back to a fully risk-on mood, with U.S. Treasuries yields falling. That helped drag the yield on Canadian 10-year bonds down to their lowest in over a year. Investors were keeping a close eye on geopolitical risks after European Union foreign ministers threatened Russia with harsher sanctions over Ukraine, and Israel said no ceasefire was near as it hit targets across the Gaza Strip. The Canadian dollar ended the North American session at C$1.0736 to the greenback, or 93.14 U.S. cents, slightly weaker than Monday's close of C$1.0730, or 93.20 U.S. cents. In a quiet week for Canadian economic data, Wednesday's report on retail sales will be in focus. Sales are forecast to have risen by 0.6 percent. The loonie rallied 1.6 percent through June but has given back about a half a percent so far this month. A disappointing jobs report and a central bank that has firmly retained its neutral stance have helped to sap some of the momentum from the currency. Sylvester expects to see a stronger U.S. dollar-Canadian dollar in the medium-term, meaning a weaker loonie. "Getting back up to the C$1.09, C$1.10 areas is realistic over the next few weeks and months," he said. "In the near term, we just need to see a break and close above the C$1.0820 area to really set this market up for the next leg higher." Canadian government bond prices were higher across the maturity curve, with the two-year up 1 Canadian cent to yield 1.080 percent. The benchmark 10-year rose 12 Canadian cents, sending the yield to 2.123 percent, its lowest level since last June.
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