CAD Edged Lower On Canada’s Retail Sales Data

The Canadian dollar edged lower against its US counterpart on Thursday as a move higher in oil prices was counterbalanced by domestic data showing that retail sales growth stalled in March, but the currency stuck to its recent sideways trading pattern, so details of the released data were stronger.

Canadian government bond yields eased across a steeper curve. The 2-year fell 4.1 basis points to 2.500%, its lowest since April 28, and the 10-year was down 0.9 basis points at 2.765%.

Canadian retail sales were unchanged in March from February, missing estimates for a 1.4% advance, as lower sales at motor vehicle and parts dealers offset gains in all other subsectors, data from Statistics Canada showed. A preliminary estimate showed that sales grew 0.8% in April.

The price of oil, one of Canada’s major exports, extended a cautious rally this week on signs of tight supply while the European Union wrangles with Hungary over plans to ban imports from Russia.

US crude prices were up 0.8% at $111.18 a barrel, while world stock markets broadly stabilized and bond yields eased as no hawkish surprises from the latest US Federal Reserve minutes helped soothe immediate worries over the impact of rate hikes on economic growth.

The Bank of Canada will hike its overnight rate by half a percentage point next Wednesday, according to all 30 economists polled by Reuters, who see interest rates at least a half-point higher by year-end than predicted just one month ago.

The Canadian dollar was trading 0.1% lower at 1.2825 to the greenback, or 77.97 US cents, toward the middle of its range over the last week or so which was between 1.2762 and 1.2895.