Canadian dollar hits session high after strong retail sales

Thu Dec 20, 2012 9:49am EST
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By Claire Sibonney

TORONTO (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.   Continued...

A man holds the new Canadian 100 dollar bill made of polymer in Toronto November 14, 2011. REUTERS/Mark Blinch