August 24, 2009 / 1:24 PM / in 11 years

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
 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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