January 23, 2019 / 2:36 PM / a year ago

CANADA FX DEBT-C$ firms with oil but gains tempered by weak retail sales data

    * Canadian dollar rises 0.1 percent against the greenback
    * Loonie touches its weakest since Jan. 7 at 1.3359
    * Canadian retail sales fall 0.9 percent in November
    * Price of U.S. oil rises 0.4 percent
    * Canadian bond prices fall across a steeper yield curve

    TORONTO, Jan 23 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Wednesday, recovering from an
earlier two-week low, as gains for stocks and oil prices offset
domestic data showing a bigger-than-expected drop in domestic
retail sales.
    At 9:10 a.m. (1410 GMT), the Canadian dollar          was
trading 0.1 percent higher at 1.3342 to the greenback, or 74.95
U.S. cents.
    The currency's strongest level of the session was 1.3305,
while it touched its weakest since Jan. 7 at 1.3359.
    Canadian retail sales fell by 0.9 percent in November from
October to C$50.39 billion ($37.85 billion), in large part due
to lower gasoline prices, as well as lower sales at motor
vehicle and parts dealers, Statistics Canada said. Analysts had
forecast a 0.6 percent decrease.             
    It followed data on Tuesday showing that factory sales and
wholesale trade both slumped more than expected in November.
    Bank of Canada Governor Stephen Poloz on Wednesday said the
Canadian economy was in good shape, although low oil prices were
delivering "a material shock" that would cut growth this year.
    The price of oil, one of Canada's major exports, plunged as
much as 45 percent between October and December before paring
some of its decline in recent weeks.
    On Wednesday, U.S. crude oil futures        were up 0.4
percent at $53.24 a barrel as U.S. crude stocks fell and
official data indicated slowing growth in U.S. shale oil output
in the coming years.             
    U.S. stocks were boosted by strong earnings from some Dow
components, after Wall Street on Tuesday suffered its second
biggest decline in 2019.             
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries on Wednesday as
investors made a cautious return to riskier assets. The 10-year
            fell 23 Canadian cents to yield 1.998 percent.
    The gap between Canada's 10-year yield and its U.S.
equivalent widened by 2.1 basis points to a spread of 78.3 basis
points, its widest since Dec. 19.

 (Reporting by Fergal Smith; editing by Jonathan Oatis)
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