(Adds strategist quotes and details throughout; updates prices)
* Canadian retail sales fall 5.7% in April
* Price of U.S. oil settles 0.3% higher
* Canadian 10-year yield rises 2.2 basis points to 1.429%
By Fergal Smith
TORONTO, June 23 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Wednesday, holding on to
this week's gains as oil rose and Federal Reserve Chair Jerome
Powell reassured markets that the U.S. central bank won't rush
to hike interest rates.
Markets were rattled last week when the Fed shifted to more
hawkish guidance. But Powell on Tuesday said the economic
recovery from the COVID-19 crisis needed more time before higher
borrowing costs are appropriate, remarks that weighed on the
U.S. dollar.
The recovery this week for the Canadian dollar reflects the
pullback in the U.S. dollar and moves in U.S. rates, said Amo
Sahota, director at Klarity FX in San Francisco.
"We never really saw a tightening between U.S. and CAD yield
spreads to support" the loonie's move lower, Sahota said.
The gap between Canada's 5-year yield and its U.S.
equivalent was at 9.4 basis points in favor of the Canadian
bond, up about 3 basis points since the Fed's release last
Wednesday of its latest policy statement and economic
projections.
The price of oil, one of Canada's major exports, rose after
data showed U.S. crude inventories has declined as travel has
picked up.
U.S. crude oil futures settled 0.3% higher at $73.08
a barrel, while the Canadian dollar was trading nearly
unchanged at 1.2303 to the greenback, or 81.28 U.S. cents.
The currency gained ground on Monday and Tuesday, clawing
back some of its decline from last week.
Canadian retail sales fell by 5.7% in April from March,
Statistics Canada said. A flash estimate showed sales were down
3.2% in May.
"The retail sales, while disappointing, can be viewed as old
news," Sahota said. "With the (COVID-19) vaccinations going
reasonably well, the market expects and initial data is showing
a decent return to activity for June."
Canadian government bond yields were mixed across a steeper
curve, with the 10-year up 2.2 basis points at
1.429%.
(Reporting by Fergal Smith; Editing by Jonathan Oatis and Paul
Simao)
Read More
