CANADA FX DEBT-C$ flat as strong retail sales can't calm nerves

Tue Nov 22, 2011 4:55pm EST
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 * C$ at C$1.0378 vs US$, or 96.36 U.S. cents
 * Canadian retail sales positive
 * Euro zone, U.S. GDP data tugs Wall St lower
 * Bond prices mixed
 (Updates to close, adds comment)
 By Jennifer Kwan
 TORONTO, Nov 22 (Reuters) - The Canadian dollar ended
unchanged against the U.S. currency on Tuesday as unrelenting
fears about euro zone debt and the global outlook offset higher
commodity prices and firm domestic economic data.
 Stock markets around the world drooped as record-high
yields at a Spanish debt auction and a downward revision of
U.S. economic growth kept investors away from riskier assets.
  Revised data on Tuesday showed U.S. gross domestic product
rose 2.0 percent in the third quarter, down from the 2.5
percent the government had estimated previously.
 Shortly after the data was released, the currency CAD=D4
tapped a low of C$1.0413 against the greenback, or 96.03 U.S.
 The U.S. report overshadowed Canadian data that showed
solidly higher than expected retail sales in September in a
sign of robust economic growth in the third quarter.
 "The ongoing risk aversion, softness in equity markets,
concerns about Europe and, to some extent, the U.S. fiscal
outlook are all weighing on investor sentiment," said Sal
Guatieri, senior economist at BMO Capital Markets.
 The Canadian currency CAD=D4 finished the session at
C$1.0378 against the greenback, or 96.36 U.S. cents, unchanged
from Monday's close.
 U.S. stock market indexes finished the day flat to lower,
while Canada's S&P/TSX composite index .GSPTSE edged up on
higher oil and gold prices. [.N] [.TO]
 Stewart Hall, senior currency strategist at RBC Capital
Markets, characterized the market tone ahead of Thanksgiving
Day in the United States as "holiday-induced no man's land".
 "I think we're really cast adrift today in terms of
direction. There just didn't seem to be anything that really
captures the imagination of the market," he said.
 Hall said market action was largely muted despite news the
International Monetary Fund had beefed up its lending
instruments and launched a six-month liquidity line, throwing
help to countries with solid policies that may be at risk from
the euro zone debt crisis. [ID:nN1E7AL16X]
 On Monday, the Canadian dollar pierced a trading range that
it had clung to for weeks, falling to a six-week low of
C$1.0419 to the greenback, or 95.98 U.S. cents. Currency
strategists suggested the next key support level would be
around C$1.0500 to the U.S. dollar.
 Canadian government bond prices were slightly lower at the
short end and firmer at the long end.
 "The strong Canadian retail sales report at least at the
margin will dissuade the Bank of Canada from easing policy,"
said BMO's Guatieri.
 Retail sales rose by 1 percent in September, the biggest
gain in almost a year and double the market forecast of a 0.5
percent increase. [ID:nN1E7AL07F]
 "At the long end, you saw the reverse, where prices have
gone up because of safe-haven demand due to concerns largely
about Europe," Guatieri said.
 The two-year bond CA2YT=RR fell 1 Canadian cent to yield
0.908 percent, while the 10-year bond CA10YT=RR climbed 13
Canadian cents higher to yield 2.091 percent.
 (Editing by Peter Galloway)