CANADA FX DEBT-C$ weaker as U.S. retail sales boost greenback

Tue Aug 13, 2013 4:37pm EDT
 
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* C$ at C$1.0343 vs US$ or 96.68 U.S. cents
    * U.S. retail sales climb at fastest pace in 7 months
    * Bond prices lower across curve

    By Alastair Sharp
    TORONTO, Aug 13 (Reuters) - The Canadian dollar ended weaker
against its U.S. counterpart in quiet trading on Tuesday, with
the greenback bolstered by U.S. retail sales data that
heightened expectations that the U.S. Federal Reserve is on the
verge of scaling back stimulus measures.
    The loonie, as Canada's currency is colloquially known,
gained against the Japanese yen, but was off against
the euro and the pound. 
    Retail sales, a key gauge of U.S. consumer spending, rose at
the fastest pace in seven months in July, a sign of quicker
economic growth that strengthens the case for the Fed to reduce
stimulus. 
    "This retail sales number this morning from the U.S. helped
jolt markets into moving," said Greg Moore, a currency
strategist at TD Securities.
    "A solid report overall, it reinforces the notion that (Fed)
tapering in September should be appropriate. It's not a very
strong signal that it will happen...but tapering is essentially
on track," he said.
    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 subdued, 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. Mikolich added 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," he said 
    The Canadian dollar ended the day 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 of C$1.0303, or 97.06
U.S. cents.
    TD's Moore said he expects the currency to trade between
C$1.0250 and C$1.0450 through the remainder of the week. 
    Market action is expected to pick up toward 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," Mikolich said.
    Canadian government debt prices were lower across the
maturity curve. The two-year bond lost 10.5 Canadian
cents to yield 1.202 percent, and the benchmark 10-year bond
 fell 67 Canadian cents to yield 2.618 percent.