CANADA FX DEBT-C$ slightly weaker vs US$, retail sales in focus

Tue Nov 19, 2013 9:56am EST
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By Solarina Ho
    TORONTO, Nov 19 (Reuters) - The Canadian dollar weakened
slightly on Tuesday against its U.S. counterpart as investors
positioned themselves ahead of retail sales data due this week
from both the United States and Canada.
    U.S. retail sales data for October, due on Wednesday, is
expected to show a 0.1 percent rise, according to economists
polled by Reuters. Canadian retail sales for September, expected
on Friday, is expected to show a 0.3 percent rise. 
    "What you're seeing is a little bit of repositioning ...
with everyone looking at growth, retail sales would be the
interesting (economic point), but even then, it's going to be
U.S. retail sales that will grab the headline," said Brad
Schruder, director of foreign exchange at BMO Capital Markets.
    Inflation data on both sides of the border are also released
this week, but Schruder said inflation, which has seen little
movement, has "almost become a tertiary figure."
    The Canadian dollar was trading at C$1.0438 versus
the greenback, or 95.80 U.S. cents at 9:13 a.m. (1416 GMT), only
a few ticks away from Monday's North American session close at
C$1.0432, or 95.86 U.S. cents.
    The loonie, which was underperforming all major currencies
except the Swedish krona, was expected to stay within the
session's current range of C$1.0415 and C$1.0450, said Schruder,
adding that it would likely trade within a narrow range for the
balance of the week.
    Overseas, the Chinese central bank said it would slowly exit
from regular intervention in the foreign exchange market. This
follows Chinese reform plans last week to let the market play a
stronger role in the economy.
    The U.S. dollar recovered early losses to trade higher
against the euro after the news. 
    "The stuff out of China is interesting for ... academics to
debate at this point. A lot of talk, knee jerk reactions, but
the plan that you're looking at, this is something that takes,
you could argue decades, if not a generation to really roll out.
It's interesting, but there's a long road there," said Schruder.
    Canadian bond yields were lower across the maturity curve,
with the two-year bond shedding 2 Canadian cents to
yield 1.115 percent, while the benchmark 10-year bond
 slipped 18 Canadian cents to yield 2.549 percent.