Bloomberg News

Canadian Dollar Rises From 2-Week Low as May Retail Sales Gain

July 24, 2012

Canada’s dollar strengthened from almost a two-week low against its U.S. counterpart after a report showed retail sales rose in May after dropping in April.

The currency fell earlier as the greenback and the yen gained versus most major peers on safety demand. Moody’s Investors Service cut its ratings outlook yesterday for Germany and the Netherlands and LCH Clearnet Ltd. raised the extra deposit it demands to trade some Spanish and Italian bonds.

“Globally, we’re seeing risk appetite being challenged, but in the euro zone it’s even more intense,” Ian Stannard, head of European currency strategy at Morgan Stanley in London, said in a telephone interview. “We expect the commodity currencies to come under pressure from signs of a global growth slowdown.”

Canada’s currency, nicknamed the loonie, added 0.2 percent to C$1.0165 per U.S. dollar at 9:03 a.m. in Toronto, after falling 0.6 percent yesterday, the most this month. One Canadian dollar buys 98.38 cents.

Government bonds dropped for the first time in three days. Canada’s 10-year yield rose four basis points, or 0.04 percentage point, to 1.62 percent. It touched 1.565 percent yesterday, the lowest yield since 1950, according to Bank of Canada and Bloomberg data.

The 2.75 percent security maturing in June 2022 decreased 40 cents at C$110.23.

Economic Data

Canadian retail sales rose less than economists forecast in May as lower spending on gasoline partly offset gains at food and clothing stores, government figures showed. Sales increased 0.3 percent to C$38.9 billion ($38.2 billion), Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg News forecast a 0.5 percent increase, based on the median of 25 projections.

The euro fell for a fifth day against the yen, the longest losing streak since May, amid speculation Europe’s sovereign- debt crisis is threatening to engulf Spain and Italy.

“We’re still looking for fairly sharp losses in euro generally in the near term,” Shaun Osborne, chief currency strategist at Toronto-Dominion Bank’s TD Securities unit, said in an e-mail. “Seasonally, this is not a pro-risk time of year, so I would expect the commodity currencies to struggle versus the U.S. dollar and for the yen to gain.”

The Canadian dollar has gained 2.3 percent this year against its nine counterparts, according to Bloomberg Correlation-Weighted Indexes. The U.S. dollar has risen 2 percent.

To contact the reporter on this story: Chris Fournier in Halifax at cfournier3@bloomberg.net

To contact the editor responsible for this story: Robert Burgess at bburgess@bloomberg.net


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