July 19, 2019 / 9:02 PM / a month ago

CANADA FX DEBT-C$ retreats from 9-month high as consumers lose their pep

 (Adds market player quotes and details; updates prices)
    * Canadian dollar falls 0.3% against the greenback
    * Canadian retail sales decline 0.1% in May
    * U.S. oil futures increase by 0.6%
    * Canada-U.S. 2-year spread widens by 3.9 basis points

    By Fergal Smith
    TORONTO, July 19 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Friday, pulling back from a near
nine-month high hit earlier in the day, as domestic data showed
a surprise decline in May retail sales and the greenback broadly
climbed.
    The value of Canadian retail trade dipped by 0.1% versus an
estimated 0.3% increase, as unusually bad weather hit sales of
food, drink and clothing.             
    "The report casts some doubt on the resiliency of the
consumer sector to the ongoing parade of worrisome geopolitical
and trade developments," Ryan Brecht, a senior economist at
Action Economics, said in a research note.
    Canada's economy has showed signs of picking up in the
second quarter after a slowdown at the turn of the year, even as
a more uncertain outlook for trade has weighed on the global
economy.
    The U.S. dollar        rose against a basket of currencies
as fears of a larger-than-expected 50-basis-point interest rate
cut in July abated after the New York Federal Reserve downplayed
dovish comments from its president on Thursday.
    "There has been a generalized rebound in the dollar and
Canada has been affected by that, too," said Alvise Marino, a
foreign exchange strategist at Credit Suisse in New York.
    At 4:10 p.m. (2010 GMT), the Canadian dollar          was
trading 0.3% lower at 1.3060 to the greenback, or 76.57 U.S.
cents. The currency's weakest level of the session was 1.3110,
while it touched its strongest since Oct. 25, at 1.3016.
    For the week, the loonie was down 0.2%.
    The Canadian dollar lost ground on Friday even as the price
of oil, one of Canada's major exports, rose. U.S. crude oil
futures        settled 0.6% higher at $55.63 a barrel on rising
tensions between the United States and Iran.             
    Still, speculators have raised bullish bets on the currency
to the highest since March 2018, data from the U.S. Commodity
Futures Trading Commission and Reuters calculations showed. As
of July 16, net long positions in the loonie rose to 20,964
contracts from 9,226 contracts in the prior week.
    Canadian government bond prices dipped across much of the
yield curve, with the 10-year             falling 2 Canadian
cents to yield 1.502%.    
    The 10-year yield touched its lowest intraday level since
July 5 at 1.485%, while the gap between Canada's 2-year yield
and its U.S. equivalent widened by 3.9 basis points to a spread
of 36.2 basis points in favor of the U.S. bond.

 (Reporting by Fergal Smith; additional reporting by Levent
Uslu;
Editing by Leslie Adler)
  
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