February 22, 2011 / 1:30 PM / 9 years ago

CANADA FX DEBT-C$ slightly softer ahead of retail sales

 * C$ dips to $1.0132
 * Bond firm across curve on Libya revolt
 TORONTO, Feb 22 (Reuters) - Canada's dollar was slightly
softer against the U.S. currency on Tuesday morning ahead of
domestic retail sales figures, which will help firm
expectations of how the economy fared in the fourth quarter.
 Canadian retail sales data for December, due at 8:30 a.m.
(1330 GMT), is the main domestic economic figures for the week.
Economists polled by Reuters expect a flat reading for December
compared to a 1.3 percent jump in November. Excluding autos,
retail sales are expected to rise 0.6 percent.
 "It seems that there is probably a greater propensity to
sell on bad news than there is to buy on good news, until we
get a shift from the Bank of Canada in terms of tone," said
Sacha Tihanyi, currency strategist at Scotia Capital.
 The data is also one of the last key pieces of data ahead
of the Bank of Canada's March 1 policy-setting decision.
 None of the 12 primary dealers surveyed by Reuters last
week expect the Bank of Canada to hike rates in March, with
most still calling for an interest rate increase in the first
half of the year. May was seen as the most likely month for the
next central bank tightening. [ID:nTZOIDE7P7]
 Canada's unexpected trade surplus in December after nine
months of deficits was one of the factors contributing to a
more upbeat outlook on the economy.
 Bank of Canada Governor Mark Carney suggested on the
weekend his projection in January of 2.3 percent annualized
growth in the fourth quarter could be tweaked higher after
growth came in at a disappointing 1 percent in the third
quarter. [ID:nN19302110]
 At 8 a.m. (1300 GMT), the currency CAD=D4 was at C$0.9870
to the U.S. dollar, or $1.0132, down slightly from Friday's
North American session close at C$0.9860 to the U.S. dollar, or
$1.0142. Most Canadian financial markets were closed on
 Canadian government bonds were firmer across the curve as
risk sentiment took a hit from the disruption in Libya, driving
down world stocks.
 Libyan leader Muammar Gaddafi signalled defiance of a
mounting revolt against his 41-year rule on Tuesday, appearing
on state television and denying he had fled the country.    
 The two-year Canadian government bond CA2YT=RR up 6
Canadian cents to yield 1.858 percent, while the 10-year bond
CA10YT=RR advanced 49 Canadian cents to yield 3.408 percent.
 (Reporting by Ka Yan Ng, Editing by Chizu Nomiyama)

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