Canadian dollar weakens to 10-week low on soft retail sales, eyes on Fed

Wed May 22, 2013 9:51am EDT
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By Alastair Sharp

TORONTO (Reuters) - The Canadian dollar took a hit from unexpectedly soft domestic retail sales data, sliding to a 10-week low against the U.S. dollar on Wednesday ahead of key testimony from U.S. Federal Reserve Chairman Ben Bernanke.

The value of domestic retail sales was unchanged mostly due to a drag from lower gasoline prices, while volumes were higher.

"The underlying reality is that whilst sales values were undermined by the influence of gasoline sales, the volumes were reasonably OK," said Jeremy Stretch, head of foreign exchange strategy at CIBC World Markets in London.

"There was always a case to fade the knee-jerk rally in dollar-CAD on the numbers."

The loonie, as Canada's currency is colloquially known, fell to its weakest level versus its U.S. counterpart in more than two months after the data, but later pared those losses to trade at C$1.0310 to the greenback, or 96.99 U.S. cents.

It closed Tuesday's North American session at C$1.0268, or 97.39 U.S. cents.

"Now it is a case of counting down the minutes until Mr Bernanke speaks," CIBC's Stretch said.

The Fed chairman is set to testify before a congressional committee at 10 a.m. (1400 GMT), while the central bank will later in the day release the minutes of its most recent meeting. <FED/DIARY>   Continued...

The Canadian 20 dollar bill made of polymer is displayed at the Bank of Canada in Ottawa May 2, 2012. REUTERS/Chris Wattie