The Canadian dollar strengthened against the greenback on Friday as unexpectedly strong Canadian retail sales data increased optimism about the outlook for economic growth. The report, along with other recent data, stood in contrast to signals from the Bank of Canada earlier this week that sluggish growth and the strong Canadian dollar could keep interest rates on hold for longer than markets had expected.
"The relief today for the Canada bulls - and there's still plenty of Canada bulls out there - was the good retail sales number this morning ... it's not all doom and gloom for the currency," said Scotia Capital's Steve Butler, director of foreign exchange trading.
The currency finished at C$0.9954 to the US dollar, or $1.0046, firming from its C$0.9971, or C$1.0029 North American close on Thursday. It rose as high as C$0.9909 after the release of the data. November retail sales climbed 1.3 percent versus a forecast of a 0.5 percent increase, with higher auto sales helping the figure to notch its biggest gain since March 2010. It was the sixth consecutive month of retail sales gains. The Canadian dollar eased from the session high following a retreat in Toronto equities and commodity prices.