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Canadian Dollar Hits One-month High on Robust Retail SalesWednesday, July 24, 2013 > 14:02:53
The Canadian dollar hit a one-month high against a broadly weaker U.S. currency on Tuesday after stronger-than-expected domestic retail sales data from May fed expectations of extended economic growth.
Higher auto sales helped drive Canadian retail sales 1.9% higher in May from April, the biggest monthly jump in more than three years and far greater than the 0.4% growth predicted by analysts.
"Retail sales this morning was obviously an outside surprise there. Good details behind the number as well, so that gave the Canadian dollar a push up," said Shaun Osborne, chief currency strategist at TD Securities.
A number of economists speculate that the data could signal higher-than-expected economic growth data for the second quarter. Canada's economy grew at a 2.5% annual rate in the first quarter.
"We did see the currency getting a lift off the back of what seemed to be a fairly stunning set of sales numbers ... it was a pretty significant across-the-board improvement," said Jeremy Stretch, head of foreign exchange strategy for CIBC World Markets in London.
The Canadian dollar finished its North American session at C$1.0285 to the greenback, or 97.23 U.S. cents, stronger than Monday's North American session close at C$1.0344, or 96.67 U.S. cents. It firmed to as much as C$1.0277, or 97.30 U.S. cents, during the session to touch its strongest level since June 20.
Osborne said stop-loss orders – which are placed earlier to sell when a currency reaches a certain price – were triggered when the currency pushed below C$1.03 in USD/CAD terms.
"It's still a case of people reducing risk and cutting positions, and I think that may be the case until next week when we get the next (U.S.) payroll numbers," said Osborne, who also noted the quiet summertime trading, reduction in flows and weaker U.S. dollar.
Canadian government debt was mostly lower in price across the maturity curve, with the two-year bond down 5.5 Canadian cents to yield 1.118% and the benchmark 10-year bond shedding 35.2 Canadian cents to yield 2.401%.