Dollar ends lower after retail sales data

Fri Jun 20, 2008 4:36pm EDT
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar capped a winning week with a lower close on Friday as details of stronger-than-expected domestic retail sales data ate away at gains made by the currency moments after the retail sales report landed.

Canadian bond prices ended higher across the curve as the market continued price out the idea that central banks in North America will be raising interest rates any time soon.

The Canadian dollar closed at C$1.0170 to the U.S. dollar, or 98.33 U.S. cents, down from C$1.0152 to the U.S. dollar, or 98.50 U.S. cents, at Thursday's close.

For the week, the currency rose 1.2 percent.

The Canadian currency shot to C$1.0101 to the U.S. dollar, or 99.00 U.S. cents, immediately after data showed retail sales in Canada rose 0.6 percent in April. But it backed off the two-week high moments after as details of the report were digested.

The data showed that the gain was heavily concentrated in Quebec, which was mostly a rebound from the previous month when big snowfalls limited gains.

"When people saw that, I think the general consensus was that the gains Quebec registered in the bounce-back in April were unlikely to be sustained in upcoming months," said George Davis, chief technical strategist at RBC Capital Markets. "And as a result of that, that would have had a bit of a moderating impact on the headline data."

The decline in the commodity-linked Canadian dollar was cushioned somewhat by higher oil prices, which often influence the currency since Canada is a major oil exporter.   Continued...