CANADA FX DEBT-C$ makes small gains after retail sales

Fri Mar 20, 2009 10:34am EDT
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* C$ off high after rising on stronger than expected data

* Recovering car sales boost Canada January retail sales

* Bonds fall as Toronto stocks extend gains into ninth day

TORONTO, March 20 (Reuters) - The Canadian dollar was moderately firmer against the U.S. currency on Friday, but off session highs, after figures showed January retail sales rose almost twice as much as expected.

An unexpected rise in new car purchases helped spur Canadian retail sales to their first increase since September, a greater-than-expected 1.9 percent, according to Statistics Canada data released on Friday. That compared to market expectations for a rise of 1 percent. [ID:nN19306411]

The data initially helped push the Canadian dollar towards its overnight session high at C$1.2292 to the U.S. dollar, or 81.35 U.S. cents, but stopped short.

At 9:55 a.m. (1455 GMT), the currency was at C$1.2356 to the U.S. dollar, or 80.93 U.S. cents, up from C$1.2377 to the U.S. dollar, or 80.80 U.S. cents, at Thursday's close.

Analysts said the rare piece of positive economic data was somewhat skewed because the figure followed a 5.2 percent decline in retail sales in December, the largest drop in more than 15 years. It also reflected a month that saw very deep discounts in vehicle prices.

Paul Ferley, assistant chief economist at Royal Bank of Canada, said that despite the small recovery in retail sales, the overall economic landscape still points to a weak January GDP.   Continued...