C$ rises to 97.04 U.S. cents
The Canadian dollar turned higher against the the U.S. currency on Wednesday as the price of oil rallied and weak retail data from south of the border raised concerns about the U.S. recovery
The Canadian dollar mirrored other major currencies that also reversed course, notably the euro, which rose to a two-month high against the greenback. [FRX/]
U.S. retail sales data for June was the latest in a series of reports to suggest the U.S. economic recovery has slowed in the past few months
Earlier in the day, investors took their cue to sell growth-related currencies from weaker European markets and easing oil prices.
But oil, a key Canadian export, turned higher to approach $78 a barrel after a U.S. report showed crude stocks fell much more than forecast and also benefited from the greenback’s easing against the euro. [O/R]
A number of the majors have really made a move higher, and oil is flirting with its intraday highs. (The Canadian dollar) picked up on that theme and went with it,” Sacha Tihanyi, a currency strategist at Scotia Capital.
There’s a little bit of restraint with the weaker than expected retail sales. We’re underperforming the majors,” Tihanyi added.
At 12:10 p.m. (1610 GMT), the Canadian dollar CAD=D4 was at C$1.0305 to the U.S. dollar, or 97.04 U.S. cents, backing off a session high of C$1.0286 to the U.S. dollar, or 97.22 U.S. cents. The currency is up from Tuesday’s close at C$1.0337 to the U.S. dollar, or 96.74 U.S. cents.
Still to come, minutes of the U.S. Federal Reserve’s most recent rate-setting meeting were seen as the next major focal point for markets.
Canadian government bond prices were mixed, with short-term bonds rising as the soft U.S. retail data boosted the appeal of safe haven assets.
But increasingly expectations that the Bank of Canada will raise interest rates next week, as measured by yields on overnight index swaps, limited the session’s gains. Those swaps suggest about a 90 percent probability of a rate hike on July 20. BOCWATCH
Canada’s economy will expand at a fast enough clip this year to prompt the Bank of Canada to continue raising rates, but growth is expected to slow in 2011, according to a Reuters poll.
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