CANADA FX DEBT-C$ weakens after soft U.S. retail data
* Weak U.S. data dampens risk appetite
* Higher oil prices cushion C$'s fall
* Bond prices higher across the curve
By Frank Pingue
TORONTO, May 13 (Reuters) - Canada's currency was slightly lower versus the U.S. dollar on Wednesday as U.S. data dimmed hopes for an economic recovery and lessened demand for perceived riskier assets, offsetting the benefit of higher oil prices.
The Canadian dollar tumbled as low as C$1.1670 to the U.S. dollar, or 85.69 U.S. cents, shortly after the U.S. data, which showed retail sales in the United States dropped for the second straight month in April. [ID:nN12361802]
But a higher price for oil, a key Canadian export whose price often influences action, helped the Canadian currency reclaim some of the post-data losses as it rose above $59 a barrel. [ID:nSIN127415]
"The (U.S.) dollar got a bit of a leg up on weaker data, sort of the risk on, risk off switch back in the off position," said Shaun Osborne, chief currency strategist TD Securities.
"But we are seeing the financial situation globally improve and I think that sort of undermines the safe haven demand ... premium of the U.S. dollar."
Earlier this week the Canadian dollar had rallied to its highest level in over six months given signs that the global economic decline may at least be troughing.
By 9:20 a.m. (1320 GMT), the Canadian dollar had recovered somewhat to C$1.1645 to the U.S. dollar, or 85.87 U.S. cents, still down from C$1.1620 to the U.S. dollar, or 86.06 U.S. cents, at Tuesday's close.
BONDS PRICES ALL HIGHER
Canadian bond prices followed the bigger U.S. Treasury market higher across the curve, reclaiming some of the previous session's drop, after the weaker-than-expected report on retail sales triggered demand for more secure government debt.
With no key Canadian data due out until later in the week, domestic bonds are likely take their direction from their U.S. counterparts and equities.
The next economic indicator ECONCA that may influence Canadian bonds is Friday's Canadian manufacturing survey for March.
The benchmark two-year Canadian government was up 1 Canadian cent at C$100.27 to yield 1.118 percent, while the 10-year bond rose 21 Canadian cents to C$105.51 to yield 3.107 percent.
The 30-year bond was up 35 Canadian cents at C$118.85 to yield 3.890 percent. (Editing by Jeffrey Hodgson)
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