Canadian dollar turns lower after weak retail data

Thu May 22, 2008 10:04am EDT
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar gave back a slice of its recent gains versus the U.S. dollar on Thursday as domestic retail sales data were lower than expected, but the currency's fall was cushioned by record high oil prices.

Domestic bond prices were pinned lower across the curve due in large part to influence from overseas markets and data that showed jobless claims in the United States unexpectedly fell.

At 9:40 a.m. (1340 GMT), the Canadian currency was at US$1.0144, valuing a U.S. dollar at 98.58 Canadian cents, down from US$1.0162, valuing a U.S. dollar at 98.41 Canadian cents, at Wednesday's session close.

It marked a turnaround for the domestic currency after rising in each of the past four sessions, including a rise to its highest level in more than two months.

Data that showed Canadian retail sales rose 0.1 percent in March, below the 0.3 percent gain forecast by analysts in a Reuters poll, dragged the Canadian dollar down to US$1.0126, valuing a U.S. dollar at 98.76 Canadian cents.

"Retail sales disappointed and that put a bid to dollar Canada," said Jack Spitz, managing director of foreign exchange at National Bank Financial. "Offset that with record high oil prices which are mitigating any significant gains in dollar Canada for the moment."

Oil prices hit a record high for a third straight day, this time rising above $135 a barrel, and kept the commodity-linked Canadian currency from falling much further.

The market will now wait to hear comments from Bank of Canada Governor Mark Carney later in the session for any hints as to where domestic interest rates are headed and to see if the bank's outlook for the economy has changed.   Continued...