Canadian dollar hits 6-day high as retail sales beat estimates
Canadian retail sales fell 0.6% in July, beating expectations of a 1.2% drop, while a preliminary estimate showed a sales rebound of 2.1% in August.
Global markets rallied after the US Federal Reserve confirmed its intention to start slowing down stimulus and shares of struggling real estate developer China Evergrande surged ahead of a crucial debt payment. A further injection of liquidity by China into its financial system has reassured investors.
The Canadian dollar was trading up 0.8% to 1.2665 against the greenback, or 78.96 US cents, its biggest gain since August 23. The currency hit its highest level since last Friday at 1.2650.
The loonie’s gains came as the US dollar lost ground against a basket of major currencies, retreating from one-month highs.
The price of oil, one of Canada’s top exports, has been supported by growing demand for fuel and a drop in US crude inventories as production remained hampered in the Gulf of Mexico after two hurricanes. US crude prices rose 0.1% to $ 72.28 per barrel.
Canadian government bond yields were higher on a steeper curve, the 10-year up 7.2 basis points to 1.286%.
The spread between the Canadian 10-year rate and its US equivalent narrowed from 3.8 basis points to 7.9 basis points in favor of the US bond, the smallest spread since August 11.
(Report by Fergal Smith, edited by Nick Zieminski)