CANADA FX DEBT-C$ pares gains but manages to end higher

Tue Aug 23, 2011 4:55pm EDT
 
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   * C$ ends up at C$0.9880 to the U.S. dollar, or $1.0121
 * Bond prices fall as risk sentiment perks up again
 * Little market impact from rise in Canadian retail sales
 (Updates to close)
 By Ka Yan Ng
 TORONTO, Aug 23 (Reuters) - The Canadian dollar finished
slightly firmer on Tuesday, but was a laggard against the U.S.
currency as it was largely left out of a global shift to
riskier assets.
 Equities and most commodities rallied, 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.
[MKTS/GLOB]
 Toronto's main stock index closed sharply higher, notching
its biggest gain in nearly two weeks. [.TO]
 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."
 The currency CAD=D4 ended at C$0.9880 to the U.S. dollar,
or $1.0121, up slightly from C$0.9901 to the U.S. dollar, or
$1.01, at Monday's session close.
 The Canadian dollar had added to overnight gains, rising to
C$0.9855 after the retail sales data before easing.
 The currency was a laggard among other majors, as well as
its commodity-linked cousins, the Australian and New Zealand
dollars, which rose about 1 percent against the greenback.
 The two-year bond CA2YT=RR fell 6 Canadian cents to yield
0.943 percent, while the 10-year bond CA10YT=RR dropped 65
Canadian cents to yield 2.378 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 have had some effect, as market players
prepared for the annual gathering of global central bankers 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 struggling 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]
 Overnight, a speech by Bank of Canada Senior Deputy
Governor Tiff Macklem is also expected to have minimal market
impact. He will be speaking in Mumbai, India, in a speech
titled "The role of the G20 in sustaining the recovery and
protecting financial stability."
 (Reporting by Ka Yan Ng; editing by Rob Wilson)