May 16, 2019 / 9:01 PM / 7 months ago

CANADA FX DEBT-C$ retreats from 6-day high but beats most other G10 currencies

 (Adds details on activity; updates prices)
    * Canadian dollar falls 0.2% against the greenback
    * Loonie touches its strongest intraday since May 10 at
1.3401
    * Canadian factory sales rise 2.1% in March
    * Canadian bond prices fall across the yield curve

    By Fergal Smith
    TORONTO, May 16 (Reuters) - The Canadian dollar edged lower
against its broadly stronger U.S. counterpart on Thursday but
performed better than most other G10 currencies as oil prices
rose and domestic factory data pointed to faster growth in the
economy.    
    Canadian factory sales were up by 2.1% in March from
February on higher motor vehicle sales, as well as petroleum and
coal products, Statistics Canada said. Analysts surveyed by
Reuters had forecast a 1.1% increase in the value of shipments.
    "Today's reading suggests a likely healthy advance in March
monthly GDP, and will support the street's view that growth will
outperform the Bank of Canada's pessimistic view for Q1," said
Royce Mendes, senior economist at CIBC Capital Markets in a
note.
    The central bank has projected the economy grew by 0.3% in
the first three months of the year after barely any growth in
the fourth quarter.
     The Bank of Canada said on Thursday the overall risk to the
Canadian financial system was slightly higher than in June 2018
and expressed concern about the increasing threat posed by
fragile corporate debt funding.             
    Separate data, from ADP, showed that Canada added 61,700
jobs in April, the second straight month of robust jobs gains.
            
    The price of oil, one of Canada's major exports, rose as
tensions in the Middle East grew, with a Saudi-led coalition
launching air strikes in retaliation for recent attacks on its
crude infrastructure. U.S. crude oil futures        settled 1.4%
higher at $62.87 a barrel.             
    At 4:20 p.m. (2020 GMT), the Canadian dollar          was
trading 0.2% lower at 1.3460 to the greenback, or 74.29 U.S.
cents, which was the second smallest decline among G10
currencies after the safe-haven Swiss franc.
    The loonie touched its strongest intraday level since May 10
at 1.3401.
    The U.S. dollar        rose to its highest level in nearly
two weeks against a basket of major currencies as investors
focused on trade war tensions, while the euro was hurt by
concerns about this weekend's European parliamentary elections.
                
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries after data showing
stronger-than-expected U.S. housing starts in April.
    The two-year            declined 1 Canadian cent to yield
1.587% and the 10-year             was down 12 Canadian cents to
yield 1.680%.

 (Reporting by Fergal Smith
Editing by Susan Thomas and Phil Berlowitz)
  
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