CANADA FX DEBT-C$ retreats as investors consolidate; central banks eye action
(Adds comment, details, closing figures) * Canadian dollar at C$1.1289, or 88.58 U.S. cents * Bond prices higher across the maturity curve * Investors look to retail sales Tuesday, OPEC on Thursday By Solarina Ho TORONTO, Nov 24 (Reuters) - The Canadian dollar gave back much of last week's gains against the greenback on Monday as market participants consolidated after the loonie rallied on Friday to touch a three-week high against the U.S. dollar on above-forecast Canadian inflation data. The currency is expected to be under some pressure in the near term and could see more volatility. Trading is expected to thin out toward the latter half of this week with the U.S. Thanksgiving holiday, but an OPEC meeting on Thursday and quarterly gross domestic product data on Friday could be key movers. "I think a lot of (today's move) is really just ... a retracement of what we saw on Friday," said Greg Moore, senior currency strategist at Royal Bank of Canada, noting that the currency was trading within Friday's range of C$1.1191 and C$1.1326. After Friday's CPI report, "today's move may be a little bit of a rethink on what (it) could mean for Bank of Canada policy," he said. "It was close enough to the Bank of Canada's own forecast for Q4 that it likely won't be enough to change their policy stance at this point." The Canadian dollar, which was underperforming most other key currencies, finished Monday's session at C$1.1289 to the greenback, or 88.58 U.S. cents, weaker than Friday's North American close at C$1.1239, or 88.98 U.S. cents. Overseas, a frenetic round of activity at central banks in Asia and Europe suggested concern about growth will be met with action. "It's a mixed U.S. dollar environment with the European strong and most of the growth currencies weak," said Camilla Sutton, chief currency strategist at Scotiabank. In commodity markets, oil prices slipped ahead of Thursday's OPEC meeting, with markets uncertain whether producers would agree on a meaningful output cut to support prices. "On Thursday - especially in an illiquid market, given that the U.S. will be closed (for Thanksgiving) - we could see a decent move in the Canadian dollar on the back of what happens in the oil markets," Moore said. Investors are also waiting for Canadian retail sales data for September to be released on Tuesday. It will be the final key piece of economic data before the third-quarter gross domestic product figures are released at the end of the week. Moore noted that both RBC and the consensus forecast for third-quarter GDP were below the Bank of Canada's forecast of 2.3 percent, raising expectations of some pressure on the loonie. Canadian government bond prices were higher across the maturity curve with the two-year adding 1.5 Canadian cents to yield 1.058 percent, and the benchmark 10-year rising 23 Canadian cents to yield 1.981 percent. (Additional reporting by Andrea Hopkins; Editing by Peter Galloway and Leslie Adler)
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