CANADA FX DEBT-C$ finds slight strength after U.S. retail sales

Mon Oct 15, 2012 10:11am EDT
 
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* C$ at C$0.9787 versus US$, or $1.0218
    * Healthy U.S. retail sales give slight lift
    * Bank of Canada speech eyed for change of tone

    By Alastair Sharp
    TORONTO, Oct 15 (Reuters) - The Canadian dollar was slightly
stronger against the U.S. currency in cautious activity on
Monday after healthy U.S. retail sales data, with attention
turning to a speech by the head of the Bank of Canada later in
the day.
    The resource-linked currency found only small room to move
in either direction, however, as mixed commodity prices gave it
little thrust, and with markets awaiting clarity on a Spanish
bailout and seeking clues on Beijing's next moves to support its
economy, 
    At 9:54 a.m. (1354 GMT), the Canadian dollar was trading at
C$0.9787 to the greenback, or $1.0218. It closed at C$0.9793 on
Friday.
    "The move post (U.S.) data was pretty limited in the grand
scheme of things. We're essentially stuck in a range here," said
Shaun Osborne, chief currency strategist at TD Securities.
    U.S. retail sales rose in September as Americans bought more
of everything from cars to gasoline and electronics, pointing to
stronger-than-expected third-quarter growth in Canada's biggest
trading partner. 
    Osborne said that if U.S. stocks continue to struggle as
they did last week, that could encourage safe-haven U.S.-dollar
buying, which would weigh on the Canadian currency.
    "The risks are probably geared somewhat higher for
dollar-Canada, just in the event of a more risk-off tone
developing here in the next little while," he said.
    Illustrating the more cautious tone, most Canadian
government bond prices moved higher. The two-year bond
 gained 2 Canadian cents to yield 1.134 percent, while
the benchmark 10-year bond added 2 Canadian cents to
yield 1.798 percent. Longer-term bonds slipped. 
    Traders will be listening closely to a speech by Bank of
Canada Governor Mark Carney later in the day for any hint of
retreat from the central bank's hawkish tone on interest rates.
    "Any deviation from that message is going to be the
surprise," Osborne said. "I wouldn't expect it."
    Benign Chinese inflation in September showed that the major
metal-buying nation has scope to ease policy even as evidence
mounts that earlier stimulative measures are gaining traction,
reducing the pressure on policymakers to act as a once-a-decade
leadership transition approaches. 
    Copper was little changed, while oil slipped and gold hit a
two-week low.