CANADA FX DEBT-C$ falls to six-week low after soft retail data
* C$ at C$1.0516 vs US$, or 95.09 U.S. cents * Retail sales fall by a larger-than-expected 0.6 pct * Inflation data could push C$ to C$1.06 - strategist By Alastair Sharp TORONTO, Aug 22 (Reuters) - The Canadian dollar slipped to its weakest level in six weeks against its U.S. counterpart on Thursday, pressured in part by softer-than-expected Canadian retail sales data. The fall was the fifth-straight decline for the loonie, as Canada's currency is colloquially known. "We've moved almost two full cents in four days. That's a meaningful movement in my book, especially given we've been more or less range-bound for a while," said Benjamin Reitzes, senior economist and foreign exchange strategist at BMO Capital Markets. Retail sales fell 0.6 percent in June after a 1.8 percent gain in May, according to Statistics Canada, foreshadowing a greater fall in gross domestic product than initially thought. Economists expected sales to fall 0.4 percent. The Canadian dollar ended at C$1.0516 against the greenback, or 95.09 U.S. cents, off 0.4 percent from Wednesday's North American finish of C$1.0473, or 95.48 U.S. cents. It was the currency's weakest close since July 9. Reitzes said the loonie could weaken even further if domestic CPI data due out on Friday disappoints, although an early July high just above C$1.06 should provide stiff resistance. "We're expecting inflation to pick up, but inflation has tended to be pretty consistently weak," he said. The U.S. dollar also extended gains as Wednesday's release of the Federal Reserve's July policy meeting minutes did not alter market expectations that the central bank will begin scaling back its stimulus program next month. "A September taper has become the global view ... the wider narrative we've always talked about is that this does lead to objective U.S. dollar strength and Canada gets caught in the crossfire," said David Tulk, chief Canada macro strategist at TD Securities. "The other part that makes CAD (the Canadian dollar) an especially poor performer, even on the crosses, is just looking at some of the weakness that we have in the Canadian data and that came out from today's retail sales report." The currency underperformed its Australian commodity-linked dollar, which got an oversized boost from promising Chinese data, and the euro struck fresh two-year highs on the back of optimistic business surveys. In the United States, the number of Americans filing new claims for unemployment benefits rose last week, but held close to a six-year low and gave a positive signal for hiring during the month. The price of Canadian government debt rose across the maturity curve, with the two-year bond adding 3 Canadian cents to yield 1.203 percent, while the benchmark 10-year bond added 15 Canadian cents to yield 2.741 percent.
© Thomson Reuters 2016 All rights reserved.