TORONTO (Reuters) - The Canadian dollar was slightly stronger against the U.S. currency in cautious activity on Monday after healthy U.S. retail sales data, with attention turning to a speech by the head of the Bank of Canada later in the day.
The resource-linked currency found only small room to move in either direction, however, as mixed commodity prices gave it little thrust, and with markets awaiting clarity on a Spanish bailout and seeking clues on Beijing's next moves to support its economy,
At 9:54 a.m. (1354 GMT), the Canadian dollar was trading at C$0.9787 to the greenback, or $1.0218. It closed at C$0.9793 on Friday.
"The move post (U.S.) data was pretty limited in the grand scheme of things. We're essentially stuck in a range here," said Shaun Osborne, chief currency strategist at TD Securities.
U.S. retail sales rose in September as Americans bought more of everything from cars to gasoline and electronics, pointing to stronger-than-expected third-quarter growth in Canada's biggest trading partner.
Osborne said that if U.S. stocks continue to struggle as they did last week, that could encourage safe-haven U.S.-dollar buying, which would weigh on the Canadian currency.
"The risks are probably geared somewhat higher for dollar-Canada, just in the event of a more risk-off tone developing here in the next little while," he said.
Illustrating the more cautious tone, most Canadian government bond prices moved higher. The two-year bond gained 2 Canadian cents to yield 1.134 percent, while the benchmark 10-year bond added 2 Canadian cents to yield 1.798 percent. Longer-term bonds slipped.
Traders will be listening closely to a speech by Bank of Canada Governor Mark Carney later in the day for any hint of retreat from the central bank's hawkish tone on interest rates.
"Any deviation from that message is going to be the surprise," Osborne said. "I wouldn't expect it."
Benign Chinese inflation in September showed that the major metal-buying nation has scope to ease policy even as evidence mounts that earlier stimulative measures are gaining traction, reducing the pressure on policymakers to act as a once-a-decade leadership transition approaches.
Copper was little changed, while oil slipped and gold hit a two-week low. <MET/L> <O/R> <GOL/>
Editing by Peter Galloway