Canadian dollar softens as greenback rises on data, yuan calm

Thu Aug 13, 2015 9:58am EDT
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TORONTO (Reuters) - The Canadian dollar softened against a rebounding U.S. currency on Thursday as economic data helped drive the greenback higher and as China soothed concern that its devaluation of the yuan might spur a currency war.

Another retreat in oil prices added to the pressure on the loonie with Canada being a major oil exporter.

The People's Bank of China said it would now calculate the daily yuan fix by taking more notice of market forces and that it saw no basis for further depreciation. It also reassured markets that it would step in to stabilize prices.

In the United States, upbeat retail sales data helped reaffirm expectations that the Federal Reserve could start raising interest rates as early as next month. Global markets have been anxious about the possibility that the falling yuan could derail the U.S. central bank's policy plans.

* At 9:29 a.m. EDT (1329 GMT), the Canadian dollar CAD=D4 was at C$1.3047 to the greenback, or 76.65 U.S. cents, weaker than the Bank of Canada's official close on Wednesday of C$1.2973, or 77.08 U.S. cents.

* The loonie, which was weaker than many of its key currency counterparts, remained range-bound, trading between $1.2960 and C$1.3064 on Thursday.

* U.S. retail sales rebounded 0.6 percent in July from June, which was also revised higher, as households boosted purchases of automobiles and a range of other goods. Economists polled by Reuters had forecast a 0.5 percent rise in July. ECONUS

* The number of Americans filing new applications for unemployment benefits unexpectedly rose by 5,000 last week to a seasonally adjusted 274,000, though the trend continued to point to a strengthening labor market. Meanwhile, U.S. import prices dropped 0.9 percent last month, their biggest decline in six months as the cost of petroleum products and other goods fell. The data suggested inflation would remain tame for a while.

* U.S. crude CLc1 prices were down 1.04 percent at $42.85 a barrel, while Brent crude LCOc1 lost 0.44 percent to $49.44.[O/R]   Continued...

The new Canadian five and 10 dollar bills, made of polymer, are displayed with the previously released 20, 50 and 100 dollar notes following an unveiling ceremony at the Bank of Canada in Ottawa April 30, 2013. REUTERS/Chris Wattie