CANADA FX DEBT-C$ weakens on U.S. retail sales, lower oil

Wed Jan 14, 2009 10:31am EST
 
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* C$ falls as U.S. retail sales drop more than expected

* Bonds rise on economic data and lower stocks

By Jennifer Kwan

TORONTO, Jan 14 (Reuters) - The Canadian dollar weakened against the U.S. currency on Wednesday, pressured by lower oil prices as well as by dour U.S. retail sales data that highlighted the growing impact the grim economic environment is having on consumer demand.

At 10:02 a.m. (1502 GMT), the Canadian currency was at C$1.2370 to the U.S. dollar, or 80.84 U.S. cents, down from C$1.2248 to the U.S. dollar, or 81.65 U.S. cents, on Tuesday.

U.S. government data showed sales at U.S. retailers fell more than expected in December as the economic downturn spurred consumers to cut back on spending. [ID:nN13410674]

"The report highlights a risk of an even deeper U.S. recession, which spurs risk aversion trades. It has tended to support the greenback and weighs especially on commodity-based currencies," said Sal Guatieri, senior economist at BMO Capital Markets.

The price of oil CLc1 fell to below $38 a barrel, erasing early gains following the retail sales report [ID:nLE263762], while gold and most base metals weakened. [ID:nLE412902]

"Softer commodity prices will undoubtedly weigh on our currency. That's been a theme for several months now ever since commodities collapsed," Guatieri said.   Continued...