LONDON (Thomson Financial) - The Canadian dollar moved back above parity against its US counterpart after a very weak set of retail sales data for July suggested the strong currency is starting to take its toll on the economy.
Official figures showed retail sales slumped by 0.8 pct in July from June and by 0.3 pct excluding autos, way below forecasts for a modest rebound after falls in June. Statistics Canada said the declines were widespread, though led by the auto sector.
'These numbers even without reading through them are ugly,' said Peter Wadkins at Thomson IFR Markets.
'Traders have been fretting about the impact of the high (Canadian dollar) -- this looks like it,' he added.
In the wake of the data, the US dollar rose back up to a high of 1.0055 against the Canadian dollar from around 1.0011 cad just before the figures were released.
The Canadian currency broke through parity against the dollar last night for the first time since 1976 and today hit a new high of 0.9932. It has gained support from broad dollar weakness as well as sharp gains in the oil price.
At 1.03 pm GMT, the US dollar was trading at 1.0035 cad.
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