TORONTO (Reuters) - The Canadian dollar strengthened against the greenback on Friday as hopes for economic recovery trumped domestic data showing a record drop in retail sales in April, when lockdowns to fight the coronavirus outbreak were in place across the country.
Canadian retail sales plummeted 26.4% in April, Statistics Canada data showed. That was a bigger drop than economists had expected but a flash estimate from the national statistical agency was for sales to rebound 19.1% in May.
Wall Street <.WORLD> rallied on hopes of a bounce back in post-pandemic economic activity, as investors shrugged off rising new COVID-19 cases in several U.S. states and in China.
A second wave of COVID-19 and another round of sweeping lockdowns could have a "very serious" impact on the Canadian economy and must be avoided, Bank of Canada Deputy Governor Lawrence Schembri said on Thursday.
The Canadian dollar
The gain for the loonie came as the price of oil, one of Canada's major exports, was bolstered by a promise from OPEC producers and allies to meet supply cuts and signs that demand, hit by the coronavirus crisis, was recovering. U.S. crude (CLc1) prices were up 3.5% to $40.21 a barrel.
Canadian government bond yields were higher across a steeper curve, with the 10-year (CA10YT=RR) up 3.7 basis points at 0.562%.