The Canadian bond prices closed lower on Friday due to the unexpected rise in Canadian retail sales after rising initially on the inflation data. The two-year bond fell 2 Canadian cents to C$99.85 to yield 3.078 percent, while the 10-year bond lost 12 Canadian cents to C$106.69 to yield 4.105 percent. The yield spread between the two-year and 10-year bond moved to 102.7 basis points from 102.1 at the previous close. The 30-year bond fell 28 Canadian cents to C$119.48 to yield 4.518 percent. In the United States, the 30-year treasury yielded 4.430 percent. The three-month when-issued T-bill yielded 2.49 percent, unchanged from the previous close.
After advancing for three days, the Canadian dollar lost ground against the US currency on Friday as tame inflation data set the tone early, while a broadly stronger greenback offered little chance for the currency to rise.
The currency finished at C$1.2661 to the US dollar, or 78.98 US cents, down modestly from C$1.2598 to the US dollar, or 79.38 US cents, at Thursday's close.
The Canadian dollar slipped as the Bank of Canada's closely watched core inflation index, which strips out energy and some food prices, rose by 1.7 percent in April. Analysts had predicted 1.9 percent.
The overall inflation rate in April rose to 2.4 percent from 2.3 percent in March, mostly because of higher gasoline prices, Statistics Canada said.
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