CANADA FX DEBT-C$ steady as U.S. economy brightens

Mon May 13, 2013 4:42pm EDT
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* C$ at C$1.0110 vs US$, or 98.91 U.S. cents
    * U.S. retail sales up 0.1 pct
    * Bond prices drop across the curve

    By Solarina Ho
    TORONTO, May 13 (Reuters) - The Canadian dollar held steady
against its U.S. counterpart in quiet trading on Monday, finding
support from U.S. retail sales figures that signaled underlying
strength in the economy.
    U.S. retail sales in April rose unexpectedly, leading
forecasters to bump up second-quarter growth
    "Considering some of the other commodity currencies have
been under so much pressure recently, the Canadian dollar is
holding in quite well," said David Bradley, director of foreign
exchange trading at Scotiabank, attributing the support to the
U.S. recovery.
    "I think (the market's) just looking at a 'buy North
America' situation ... recently the North American situation is
looking a little better, so the Canadian dollar's outperforming
some of its commodity peers."
    The United States is Canada's largest trading partner and
stronger U.S. consumer spending is typically good for the
Canadian dollar and Canada.
    The Canadian dollar was trading at C$1.0110 versus the U.S.
dollar, or 98.91 U.S. cents, little changed from Friday's close
of C$1.0112, or 98.89 U.S. cents.
     Retail sales, which account for about 30 percent of U.S.
consumer spending, edged up 0.1 percent after a revised 0.5
percent decline in March. Economists polled by Reuters had
expected April sales to drop 0.3 percent. 
    "Retail sales have been supporting the Canadian dollar,
providing some more insight that the U.S. economy may be
slightly stronger than what was expected," said Charles
St-Arnaud, an economist and currency strategist at Nomura
Securities in New York.
    "It seems like we're going into a turn where indicators are
showing that the U.S. economy is probably not as bad as feared."
    The Canadian dollar was mixed against other major
currencies. Against fellow commodity currency the Australian
dollar, it touched its strongest level since mid-October 2012.
    U.S. and Canadian inflation data on Thursday and Friday look
to be the week's economic highlights. April inflation is
expected to rise a very tame 0.1 percent in Canada.
    Prices for Canadian government bonds were generally lower
across the curve. The two-year bond slipped 2.5
Canadian cents to yield 1.018 percent, while the benchmark
10-year bond lost 20 Canadian cents to yield 1.909