TORONTO: The Canadian dollar held steady against its US counterpart in quiet trading on Monday, finding support from US retail sales figures that signaled underlying strength in the economy.
US retail sales in April rose unexpectedly, leading forecasters to bump up second-quarter growth estimates.
"Considering some of the other commodity currencies have been under so much pressure recently, the Canadian dollar is holding in quite well," said David Bradley, director of foreign exchange trading at Scotiabank, attributing the support to the US recovery.
"I think (the market's) just looking at a 'buy North America' situation ... recently the North American situation is looking a little better, so the Canadian dollar's outperforming some of its commodity peers."
The United States is Canada's largest trading partner and stronger US consumer spending is typically good for the Canadian dollar and Canada.
The Canadian dollar was trading at C$1.0110 versus the US dollar, or 98.91 US cents, little changed from Friday's close of C$1.0112, or 98.89 US cents.
Retail sales, which account for about 30 percent of US consumer spending, edged up 0.1 percent after a revised 0.5 percent decline in March. Economists polled by Reuters had expected April sales to drop 0.3 percent.
"Retail sales have been supporting the Canadian dollar, providing some more insight that the US economy may be slightly stronger than what was expected," said Charles St-Arnaud, an economist and currency strategist at Nomura Securities in New York.
"It seems like we're going into a turn where indicators are showing that the US economy is probably not as bad as feared."
The Canadian dollar was mixed against other major currencies. Against fellow commodity currency the Australian dollar, it touched its strongest level since mid-October 2012.
US and Canadian inflation data on Thursday and Friday look to be the week's economic highlights. April inflation is expected to rise a very tame 0.1 percent in Canada.
Prices for Canadian government bonds were generally lower across the curve. The two-year bond slipped 2.5 Canadian cents to yield 1.018 percent, while the benchmark 10-year bond lost 20 Canadian cents to yield 1.909 percent.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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