Canadian dollar clings to weekly gain as retail sales beat estimates

THE Canadian dollar steadied against its US counterpart on Friday (Sep 20) as domestic data showed retail sales rising more than expected in July and despite the greenback notching gains against some other major currencies.

The loonie was trading nearly unchanged at 1.3560 to the US dollar, or 73.75 US cents, after moving in a range of 1.3543 to 1.3589. For the week, the currency was up 0.2 per cent.

Canadian retail sales grew by 0.9 per cent in July from June, eclipsing forecasts for a gain of 0.6 per cent, while a preliminary estimate showed sales up 0.5 per cent in August.

The data “may ease concerns that the economy has slowed sharply”, Shaun Osborne, chief currency strategist at Scotiabank, said in a note. “That should help limit upside movement in the USD at least.”

The US dollar strengthened against a basket of major currencies after the Bank of Japan left interest rates unchanged.

The American currency was clawing back some declines after the Federal Reserve kicked off its easing cycle on Wednesday with a half-percentage-point reduction in interest rates.

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The Fed’s larger-than-usual rate cut has led to investors raising bets the Bank of Canada (BOC) would increase the size of its cuts. The central bank has eased three times since June, moving in quarter-percentage-point steps.

Still, BOC governor Tiff Macklem said adoption of artificial intelligence by businesses could add to price pressures in the short term by boosting demand.

Canadian bond yields moved higher across the curve. The 10-year was up one basis point at 2.937 per cent, having rebounded from a 16-month low on Tuesday at 2.829 per cent. REUTERS