Canada dollar finds slight strength after U.S. retail sales

Mon Oct 15, 2012 10:12am EDT
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By Alastair Sharp

TORONTO (Reuters) - The Canadian dollar was slightly stronger against the U.S. currency in cautious activity on Monday after healthy U.S. retail sales data, with attention turning to a speech by the head of the Bank of Canada later in the day.

The resource-linked currency found only small room to move in either direction, however, as mixed commodity prices gave it little thrust, and with markets awaiting clarity on a Spanish bailout and seeking clues on Beijing's next moves to support its economy,

At 9:54 a.m. (1354 GMT), the Canadian dollar was trading at C$0.9787 to the greenback, or $1.0218. It closed at C$0.9793 on Friday.

"The move post (U.S.) data was pretty limited in the grand scheme of things. We're essentially stuck in a range here," said Shaun Osborne, chief currency strategist at TD Securities.

U.S. retail sales rose in September as Americans bought more of everything from cars to gasoline and electronics, pointing to stronger-than-expected third-quarter growth in Canada's biggest trading partner.

Osborne said that if U.S. stocks continue to struggle as they did last week, that could encourage safe-haven U.S.-dollar buying, which would weigh on the Canadian currency.

"The risks are probably geared somewhat higher for dollar-Canada, just in the event of a more risk-off tone developing here in the next little while," he said.

Illustrating the more cautious tone, most Canadian government bond prices moved higher. The two-year bond gained 2 Canadian cents to yield 1.134 percent, while the benchmark 10-year bond added 2 Canadian cents to yield 1.798 percent. Longer-term bonds slipped.   Continued...

Images of the front and the back of the new Canadian 50 dollar bill, made of polymer, are seen on display before a news conference in Quebec City, March 26, 2012. REUTERS/Mathieu Belanger