Canada’s dollar traded in the narrowest range since May before reports this week forecast to show retail sales shrank and the consumer price index remained below the central bank’s inflation target for a 15th month.
The currency fell last week amid speculation the U.S. Federal Reserve will slow monetary stimulus as soon as September. Yields (GCAN10YR) on Canadian-government 10-year bonds climbed to a two-year high for a fifth straight day amid speculation the nation’s economy is lagging behind that of its biggest trading partner. Stocks fell and commodities fluctuated.
“Investors are waiting for more fundamental data to make a move, and retail sales and CPI should give us direction this week,” Shaun Osborne, chief currency strategist at Toronto-Dominion Bank, said in a telephone interview. “The Canadian dollar is still somewhat overvalued. Longer-term, the U.S. dollar should continue to improve as we get closer to tapering. That means a weaker Canadian dollar.”
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