CANADA FX DEBT-C$ pares gains to hold near flat

Tue Aug 23, 2011 2:53pm EDT
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   * C$ cuts gains to C$0.9891 to the US$, or $1.0110
 * Bond prices fall as risk sentiment perks up again
 * Little market impact from rise in Canadian retail sales
 (Adds details)
 By Ka Yan Ng
 TORONTO, Aug 23 (Reuters) - The Canadian dollar gave up
most of its gains against the U.S. currency on Tuesday, left
out of a global shift to riskier assets.
 Equities and some commodities were rallying, supported by
gauges of Chinese and euro zone economic activity that came in
less gloomy than feared. That pushed lingering worries of the
euro zone debt crisis aside, putting pressure on bond pricing.
 But while Canada's retail sales grew for a third straight
month, the figure prompted little enthusiasm from market
players who noted a one-off jump in auto sales had fueled most
of the rise.
 "Equities have maintained a lot of their strength but we're
not getting the same strength as others from a weaker U.S.
dollar," said Mark Chandler, head of Canadian fixed income and
currency strategy, at RBC Capital Markets.
 "The retail sales number wasn't bad really, but it seems to
be having some residual effect. Maybe that's restraining the
Canadian dollar a little bit versus its peers."
 At 2:33 p.m. (1833 GMT), the currency CAD=D4 was at
C$0.9891 to the U.S. dollar, or $1.0110, up  slightly from
C$0.9901 to the U.S. dollar, or $1.01, at Monday's session
 The Canadian dollar had added to its overnight gains,
rising to C$0.9855 before gradually fading.
 The Canadian currency was a laggard among other majors, and
its commodity-linked cousins, the Australian and New Zealand
dollars, which rose about 1 percent against the greenback.
 The two-year bond CA2YT=RR was off 5 Canadian cents to
yield 0.899 percent, while the 10-year bond CA10YT=RR edged
down 18 Canadian cents to yield 2.327 percent.
 Retail sales in June were up 0.7 percent from May as auto
sales roared back to life, Statistics Canada data showed. The
increase matched forecasts. Excluding autos, sales fell by 0.1
percent in the month versus market expectations for a 0.2
percent increase. [ID:nN1E77M09U]
 May's advance was revised up to 0.3 percent from an initial
0.1 percent, and in volume terms, sales rose 1.6 percent.
 Thin trading might be having some effect, as market prepare
for the annual central bankers gathering in Jackson Hole,
Wyoming, which remains the key event for late this week.
 Investors are looking to see if the U.S. Federal Reserve
announces further economic stimulus, a year after Chairman Ben
Bernanke launched a second round of quantitative easing to
revive the U.S. economy.
 A speech on Tuesday by Jean Boivin, deputy governor at the
Bank of Canada, made no mention of current monetary policy and
had little impact on the market. [ID:nT5E7J801A]
 (Reporting by Ka Yan Ng; editing by Rob Wilson)