Canada's Dollar Poised for Weekly Fall on Oil Drop, Sales Data

By Jamie McGee

July 25 (Bloomberg) -- Canada's dollar is poised for a weekly decline after oil dropped and a report showed a rise in retail sales was less than forecast.

The Canadian dollar depreciated versus 12 of the 16 most- actively traded currencies, falling 0.8 percent against its U.S. counterpart since July 18. It is the first weekly drop since the five days ended July 4. The currency is little changed today.

``There was no reason to buy the Canadian dollar this week,'' said David Watt, a senior currency strategist at RBC Capital Markets in Toronto, a unit of Canada's biggest bank by assets. ``We've got oil prices coming back down and soft economic numbers. It's basically a one-two punch to cause people to be more cautious about pushing the Canadian dollar through parity.''

The currency strengthened 0.1 percent today to C$1.0142 per U.S. dollar at 8:13 a.m. in Toronto, from C$1.0148 yesterday. It has declined from C$1.0057 on July 18. One Canadian dollar buys 98.59 U.S. cents.

Oil prices have fallen more than $20 a barrel from a $147.27 record on July 11. Alberta has the largest crude reserves outside the Middle East. It gained 0.6 percent today to $126.26.

The Bank of Canada Commodity Price Index declined for a third week from a record 318.13 on July 2. It reached 290.57 on July 23.

Retail sales rose 0.4 percent in May, compared with the 0.6 percent median forecast of 22 economists surveyed by Bloomberg News. Statistics Canada released the report on July 22.

The yield on the two-year government bond declined 2 basis points, or 0.02 percentage point, to 3.12 percent. The price of the 3.75 percent security due in June 2010 rose 3 cents to C$101.14.

To contact the reporter on this story: Jamie McGee in New York at jmcgee8@bloomberg.net