CANADA FX DEBT-C$ softer as market eyes European summit

Wed May 23, 2012 9:43am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* C$ hits low of C$1.0246 vs US$, or 97.60 U.S. cents
    * Retail sales edge up 0.4 pct in March
    * Currency outperforms New Zealand and Australian dollars
    * Bonds climb across curve; 30-yr yield near record low

    By Jennifer Kwan	
    TORONTO, May 23 (Reuters) - Canada's dollar edged lower
against its U.S. counterpart on Wednesday, dragged down by
broader concerns about Europe's financial stability, even as
domestic data showed retail sales bounced back in March.	
    Canadian retail sales climbed in March after a February
setback, growing 0.4 percent as consumers bought more cars and
warm weather prompted them to begin their spring shopping for
items such as clothing, sporting goods and garden equipment.
    The rise was a notch above the 0.3 percent gain forecast by
market operators and followed a 0.2 percent decline in February,
according to government data. Excluding autos, however, sales
were up just 0.1 percent versus a market forecast for a rise of
0.5 percent rise.	
    After the report, the Canadian dollar slipped to a
session low of C$1.0246 versus the U.S. currency, or 97.60 U.S.
cents, from about C$1.0225 just before the data's release.	
    At around 9:25 a.m. (1425 GMT), the currency was at C$1.0230
versus the U.S. currency, or 97.75 U.S. cents, weaker than
Tuesday's North American session finish at C$1.0218.	
    "The retail sales number has had a very fleeting impact,"
said Greg Moore, a foreign exchange strategist at TD Securities. 	
    "The focus remains on Europe for now."	
    Investors shunned riskier assets on doubts that any new
measures to tackle the euro zone debt crisis would emerge from a
European leaders summit.	
    Lack of market confidence the summit would yield meaningful
progress sent the euro to a 21-month low, put an end to a rally
in European equities, and sent yields on Spanish and Italian
bonds higher. 	
    The leaders are expected to discuss boosting growth at their
meeting later on Wednesday and the idea of a joint euro zone
bond. French President Francois Hollande supports the bond plan,
but German Chancellor Angela Merkel opposes it. 	
    A key concern will be ways to aid debt-mired Greece, said
Moore, who sees the currency trading in a tight range of
C$1.0150-C$1.0250 against the greenback.	
    Canada's dollar notched a mixed performance against other
G10 currencies, but outperformed some of its commodity-linked
peers, reaching 2012 highs against the New Zealand and
Australian dollars.	
    Canada's two-year government bond climbed 10
Canadian cents higher to yield 1.164 percent, while the
benchmark 10-year bond rose 40 Canadian cents to
yield 1.867 percent. The 30-year yield was 2.418
percent, near the record-low level of 2.408 percent reached last