Forex News – Canadian dollar gains after retail sales data

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The Canadian dollar made some significant gains against its U.S. counterpart for most of the day, lifted by risk sentiment as well as positive Canadian retail sales data.

Volume for retail sales jumped for a third straight month, rising by 0.7 percent from May to June, lead by an increase in auto sales. Numbers were in line with expectations; hence the Canadian dollar’s rise against the greenback was short lived.

USDCAD dipped on the data to 0.9852 from 0.9870 at 8:30 am Toronto time, but soon rebounded to 0.9897 about an hour later.

Statistics Canada reported core data, which is the change in the total value of sales at the retail level, excluding automobiles, as well as general retail sales data. The data was mixed, with core sales actually falling by 0.1 percent which was more than forecast. But general retail sales number rose to 0.7 percent, higher than the expected 0.6 percent, and up from the prior month’s 0.3 percent.

The Canadian dollar was also boosted by rising oil prices, being a commodity-linked currency.

As the U.S. trading session progressed, the Canadian dollar weakened due to the U.S. equity markets falling.

There may be increased volatility in the U.S. dollar as the Friday meeting in Jackson Hole, Wyoming approaches, where U.S. Fed Chairman Ben Bernanke is expected to signal whether he will extend quantitative easing. If so, this will weaken the U.S. dollar.