CANADA FX DEBT-C$ beats G10 peers as investors cheer domestic economic strength - REUTERS
JUNE 22, 2022
By Fergal Smith
0 MIN READ
* Canadian dollar strengthens 0.5% against the greenback
* Retail sales increase 0.9% in April
* Price of U.S. oil settles nearly 1% higher
* 10-year yield rises 4.4 basis points
By Fergal Smith
TORONTO, June 21 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Tuesday, extending
its recovery from a 19-month low, as oil prices rose and
domestic retail sales data supported bets for aggressive
interest rate hikes by the Bank of Canada.
The loonie was trading 0.5% higher at 1.2920 to the
greenback, or 77.40 U.S. cents, the biggest gain among G10
On Friday, it touched its weakest since November 2020 at
1.3078 as investors worried that the Federal Reserve's move last
week to a more hawkish expected path for interest rate hikes
could derail economic growth.
"The reality is that the Bank of Canada is going to be just
as aggressive as the Fed," said Tony Valente, senior FX dealer
"Today's better-than-expected retail sales report reinforces
this view and reminds us that Canada's economy is the best
performing economy in the G7."
Canadian retail sales rose 0.9% in April, beating forecasts
of a 0.8% gain and including higher volumes. A preliminary
estimate showed that sales were up 1.6% in May.
The Organisation for Economic Co-operation and Development
forecast this month that Canada's economy would grow 3.75% in
2022, the highest rate among G7 countries.
Money markets see about a 75% chance that the Bank of Canada
would raise interest rates by three quarters of a percentage
point next month, which would be its biggest hike in 24 years.
Canadian inflation data for May, due on Wednesday, could
offer further clues on the rate outlook.
Gains for the loonie came as Wall Street rebounded after a
sharp sell-off last week, while the price of oil, one of
Canada's major exports, was boosted by high summer fuel demand.
U.S. crude prices settled nearly 1% higher at $110.65 a
The Canadian 10-year rose 4.4 basis points to
3.503%, tracking the move in U.S. Treasuries.
(Reporting by Fergal Smith; Editing by Nick Zieminski and Ken