Stocks

C$ weak as retail sales rise is overshadowed by U.S. data

Reuters

By Saqib Iqbal Ahmed

April 18 () - The Canadian dollar slipped against its U.S. counterpart on Thursday, as data showing a rise in Canadian retail sales was overshadowed by strong U.S. retail sales numbers that pointed to a relatively stronger U.S. economy.

At 3:23 p.m. EDT (1923 GMT), the Canadian dollar traded about 0.3% lower at 1.3379 to the greenback, or 74.74 U.S. cents. The currency, which touched its strongest intraday level since March 21 on Wednesday at 1.3270, traded in a range of 1.3336 to 1.3399.

Excluding the effects of price changes, retail sales increased 0.2% in volume terms.

"Today's retail sales number was good from (a)far but far from great," said Karl Schamotta, director of foreign exchange strategy and structured products at Cambridge Global Payments.

"At the headline level it looks quite promising but once you strip out the effects of price changes you are not looking at a report that dramatically alters where the Canadian dollar is heading," said Schamotta.

"What we are seeing here at the moment is the American consumer proving far more resilient than market participants have long expected," said Schamotta.

U.S. retail sales increased by the most in 1-1/2 years in March as households boosted purchases of motor vehicles and a range of other goods, the latest indication that economic growth picked up in the first quarter after a false start.

The Bank of Canada is expected to hold policy steady at its April 24 meeting and for the rest of this year, with calls for the next hike in early 2020 resting on a knife's edge, a poll showed, the latest dulling of rate expectations for a major central bank.

"Although the decent retail performance suggests that households are in a better state than we feared, the outlook for consumer spending growth remains challenging," Stephen Brown, senior Canada economist at Capital Economics, said in a note.

In the Canadian government bond market, the two-year rose 6.5 Canadian cents to yield 1.625% and the 10-year climbed 50 Canadian cents to yield 1.766%.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Reuters

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