June 19, 2020 / 1:56 PM / 19 days ago

CANADA FX DEBT-Canadian dollar gains as investors bet on economic recovery

    * Canadian dollar rises 0.3% against the greenback
    * Canadian retail sales plunge 26.4% in April
    * Price of U.S. oil increases 3.5%
    * Canadian bond yields rose across a steeper curve

    TORONTO, June 19 (Reuters) - The Canadian dollar
strengthened against the greenback on Friday as hopes for
economic recovery trumped domestic data showing a record drop in
retail sales in April, when lockdowns to fight the coronavirus
outbreak were in place across the country.
    Canadian retail sales plummeted 26.4% in April, Statistics
Canada data showed. That was a bigger drop than economists had
expected but a flash estimate from the national statistical
agency was for sales to rebound 19.1% in May.             
    Wall Street          rallied on hopes of a bounce back in
post-pandemic economic activity, as investors shrugged off
rising new COVID-19 cases in several U.S. states and in China.
            
     A second wave of COVID-19 and another round of sweeping
lockdowns could have a "very serious" impact on the Canadian
economy and must be avoided, Bank of Canada Deputy Governor
Lawrence Schembri said on Thursday.        
    The Canadian dollar        was trading 0.3% higher at 1.3563
to the greenback, or 73.73 U.S. cents, on Friday. The currency,
which was up 0.1% for the week, traded in a range of 1.3547 to
1.3615.
    The gain for the loonie came as the price of oil, one of
Canada's major exports, was bolstered by a promise from OPEC
producers and allies to meet supply cuts and signs that demand,
hit by the coronavirus crisis, was recovering. U.S. crude       
prices were up 3.5% to $40.21 a barrel.             
    Canadian government bond yields were higher across a steeper
curve, with the 10-year             up 3.7 basis points at
0.562%.

 (Reporting by Fergal Smith; editing by Jonathan Oatis)
  
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