C$ retreats from a 10-day high against broadly stronger greenback
By Fergal Smith
TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Friday, retreating from an earlier 10-day high as firm U.S. data supported the greenback and domestic manufacturing data disappointed.
Canadian factory sales fell more than expected in May, sliding 1.0 percent from April on weakness in motor vehicles and some energy products.
The U.S. dollar rose against a basket of major currencies after stronger than expected retail sales added to evidence that growth in the U.S. economy has regained momentum after a first-quarter lull.
Still, the Canadian dollar advanced 0.8 percent for the week as a somewhat optimistic update on Wednesday from the Bank of Canada lowered expectations for an interest rate cut.
The implied probability of a rate cut this year fell to 7 percent, overnight index swaps data showed. It had been above 30 percent in the week following the British referendum vote on June 23 to leave the European Union.
Adding to support for Canada's risk-sensitive currency, the market has taken in stride the Bank of England's surprise decision on Thursday not to cut interest rates.
"If the Bank of England isn't crying about the sky falling and cutting rates ... then maybe we have gotten ahead of ourselves a little bit around these Brexit fallout concerns," said Brad Schruder, director of corporate sales and structuring at BMO Capital Markets.
The Canadian dollar ended at C$1.2937 to the greenback, or 77.30 U.S. cents, weaker than Thursday's close of C$1.2898, or 77.43 U.S. cents. Continued...