CANADA FX DEBT-C$ eases as US$ gains on retail sales

Tue Aug 13, 2013 10:00am EDT
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* C$ at C$1.0343 vs US$ or 96.68 U.S. cents
    * Core U.S. retail sales climb at fastest pace in 7 months
    * Bond prices mostly lower across curve

    By Solarina Ho
    TORONTO, Aug 13 (Reuters) - The Canadian dollar softened to
session lows on Tuesday against its U.S. counterpart, which
strengthened in part on positive U.S. retail sales, but overall
trading was subdued.
    Core U.S. retail sales rose 0.5 percent in July at its
fastest pace in seven months, a sign of quicker economic growth
that could strengthen the case for the U.S. Federal Reserve to
scale back its stimulus program. The core gauge excludes sales
of cars, gasoline and building materials 
    Other data on Tuesday showed U.S. small business optimism
improving in July, while import prices rose less than expected
during the month.
    The Canadian dollar's moves were limited, however, with
little domestic data to drive direction until manufacturing
sales on Friday.
    "It's the late summer doldrums ... It's pretty benign for
now," said Don Mikolich, executive director, foreign exchange
sales at CIBC, adding that markets are waiting for clear signals
about what the Fed might do. "Canada's going to take its cues
from those sorts of developments."  
    The Canadian dollar was trading at C$1.0343 versus
the U.S. dollar, or 96.68 U.S. cents. This was weaker than
Monday's North American finish at C$1.0303, or 97.06 U.S. cents.
    The currency is expected to trade between C$1.0300 and
C$1.0350 on Monday, according to RBC Capital Markets.
    Market action is expected to pick up towards the end of the
month with the release of Canadian inflation, retail sales and
economic growth data.
    "I think by the end of the month, we'll have a bit of a
picture of whether the economy here is still sputtering, or
whether we'll see a little bit of trend growth," said Mikolich.
    Prices of Canadian government debt were mostly lower across
the maturity curve. The two-year bond lost 5.5
Canadian cents to yield 1.177 percent, and the benchmark 10-year
bond fell 57 Canadian cents to yield 2.605 percent.