CANADA FX DEBT-C$ dips as retail sales data falls short of estimates

BY Reuters | ECONOMIC | 01/21/22 09:40 AM EST
       * Canadian dollar weakens 0.1% against the greenback
    * Canadian retail sales rise 0.7% in November
    * Price of U.S. oil falls 0.9%
    * Canadian bond yields ease across the curve

    TORONTO, Jan 21 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Friday as uncertainty about the
pace of expected Federal Reserve interest rate hikes weighed on
investor sentiment and domestic data showed retail sales growing
less than expected in November.
    The loonie        was trading 0.1% lower at 1.2520 to the
greenback, or 79.87 U.S. cents, after trading in a range of
1.2499 to 1.2537.
    For the week, it was on track to gain 0.3% as expectations
built for a Bank of Canada https://www.reuters.com/world/americas/even-omicron-slams-canada-bets-january-rate-hike-rise-2022-01-18
 interest rate hike next week.
    Canadian retail sales rose 0.7% in November, on higher sales
at gasoline stations and building materials and gardening
equipment and supplies dealers, Statistics Canada said.
    That missed analyst estimates for a 1.2% increase, while
prelinary data showed sales falling 2.1% in December.
    Stock markets globally          dropped as investors awaited
the Federal Reserve's FOMC meeting next week for details on how
it intends to tackle high inflation and weaker-than-expected
earnings from companies that soared in the pandemic hit investor
confidence.
    The price of oil, one of Canada's major exports, was
pressured by an unexpected rise in U.S. crude and fuel
inventories while investors took profits after the global
benchmarks touched seven-year highs this week.
    U.S. crude        prices were down 0.9% at $84.81 a barrel.
    Canadian government bond yields were lower across the curve,
tracking the move in U.S. Treasuries. The 10-year
eased 4 basis points to 1.793%, pulling back from its highest
level in nearly three years on Wednesday at 1.905%.

 (Reporting by Fergal Smith; editing by Barbara Lewis)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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