CANADA FX DEBT-C$ hovers close to parity ahead of retail sales

Fri Jan 21, 2011 8:12am EST
 
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 * C$ ticks up to $1.0042
 * Bond prices firm across curve
 By Claire Sibonney
 TORONTO, Jan 21 (Reuters) - The Canadian dollar was up
slightly against its U.S. counterpart on Friday, holding above
parity as firm global equity markets and commodity prices lent
some support ahead of domestic retail sales data.
 Oil, a key Canadian export, edged higher after renewed
confidence the European debt crisis would be resolved knocked
the U.S. dollar down against the euro and helped to spur buying
across a range of commodities. [O/R]
 Canadian retail sales figures for November were seen
providing further direction. Analysts polled by Reuters called
for a 0.5 percent increase. [ECON/CA]
 "The area we want to focus on is real retail sales that
strips out the impact of inflation, just because gas prices are
a major part of that 0.5 percent nominal gain and here we need
to be a little bit careful in thinking that this might pose a
bit of a risk to Q4 growth," said David Tulk, chief Canada
macro strategist at TD Securities.
 "We're looking basically at growth around the 2.3 percent
that the Bank of Canada expects but if there is a surprise to
this number, it would be possibly be to the downside just in
terms of the real inflation adjusted measure."
 At 8:01 a.m. (1301 GMT), the Canadian dollar CAD=D4 stood
at C$0.9958 to the U.S. dollar, or $1.0042, up slightly from
Thursday's North American close at C$0.9971 to the U.S. dollar,
or $1.0029.
 The currency on Thursday fell for a third straight session
against the greenback to its weakest levels in more than two
weeks, weighed down by stronger-than-expected Chinese growth
data as well as surprisingly dovish talk by the Bank of Canada
earlier in the week.
 "We've reoriented ourselves away from what was looking to
be stronger than parity in a cohesive way to something that is
basically bouncing around parity," added Tulk.
 "We're kind of back to where we think the currency should
be."
 Canadian government bond prices edged higher, tracking U.S.
Treasuries. The two-year bond CA2YT=RR was up 3 Canadian
cents to yield 1.710 percent, while the 10-year bond
CA10YT=RR gained 5 Canadian cents to yield 3.299 percent.
  (Reporting by Claire Sibonney)