CANADA FX DEBT-C$ gets boost from upbeat retail sales data
* C$ hits highest level since Aug. 6.
* Canada retail sales top expectations
* Bond prices mostly flat
By Frank Pingue
TORONTO, Aug 24 (Reuters) - Canada's dollar rose to its highest level in over two weeks versus the U.S. currency on Monday after domestic retail sales data topped expectations.
The latest domestic data showed retail sales in Canada rose 1 percent from May, far surpassing the consensus forecast for a 0.2 percent increase. [ID:nN24314203]
That immediately sent the Canadian dollar up to C$1.0746 to the U.S. dollar, or 93.06 U.S. cents, which marked its highest level since Aug. 6. Ahead of the data it was flat around C$1.0780 to the U.S. dollar, or 92.76 U.S. cents.
"The data was stronger than expected and it kind of confirms the uptrend that we've seen in the Loonie since late last week," said George Davis, chief technical strategist at RBC Capital Markets.
"Given the strength that we've seen since last Thursday I think it's just given some positive reinforcement to that trend and we've seen some added buying of Canada in response."
At 9:15 a.m. (1315 GMT), the Canadian unit was at C$1.0736 to the U.S. dollar, or 93.14 U.S. cents, up from C$1.0819 to the U.S. dollar, or 92.43 U.S. cents, at Friday's close.
The rally extends a recent run-up in the Canadian currency as it is coming off a string of four straight higher closes, a move attributed mostly to oil prices hitting a 2009 high and hopes that the global economy was on the mend.
But the move in Canada's currency for the remainder of the session could be largely influenced by the action in equity markets, which are a barometer of investor risk sentiment.
"The key thing is if equity markets can hold onto their gains and stay relatively stable than I think that the Canadian dollar should be able to hold onto these recent gains," said Davis. "And if we happen to see a selloff in stocks than we are likely to see a little bit of profit taking hit the Canadian dollar."
BOND PRICES FLAT
Canadian bond prices were mostly flat across the curve as demand for more secure assets like government debt was sapped as stock futures were pointing to a higher open.
There was also influence from the bigger U.S. Treasury markets given investor concern that the global appetite for massive doses of U.S. securities may be waning. The Treasury is set to auction $109 billion of two-, five- and seven-year notes this week.
The two-year Canadian bond was down 2 Canadian cents at C$99.27 to yield 1.368 percent, while the 10-year bond rose 3 Canadian cents to C$102.18 to yield 3.484 percent.
The 30-year bond shed 10 Canadian cents to C$117.30 to yield 3.966 percent.
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