By Fergal Smith
TORONTO (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Friday as the greenback gave back some recent gains against a basket of other major currencies and a measure of domestic underlying retail sales rose in December.
Canadian retail sales were unchanged in December from November at C$51.65 billion, undershooting the 0.1% gain that analysts had expected, data from Statistics Canada showed. But sales were more robust after excluding motor vehicles and parts dealers, rising 0.5%.
"Retail sales extended the string of disappointing readings on the Canadian economy, but some of the stripped down measures proved more encouraging than the headline," said Royce Mendes, a senior economist at CIBC Capital Markets.
Last month, the Bank of Canada left the door open to an interest rate cut should a recent slowdown in domestic growth persist. Investors see about a 50% chance that the central bank would ease by April.
At 10:09 a.m. (1509 GMT), the Canadian dollar was trading 0.2% higher at 1.3235 to the greenback, or 75.56 U.S. cents. The currency traded in a range of 1.3233 to 1.3269.
For the week, the loonie was up 0.1%.
The U.S. dollar (DXY) pulled back from a three-year peak as traders swooped back into the Japanese currency after its worst four-day run in more than two years.
Stocks on Wall Street and the price of oil, one of Canada's major exports, fell as a rise in new cases of coronavirus and weak Asian data fueled uncertainty about the economic outlook. U.S. crude oil futures (CLc1) were down 1.4% at $53.12 a barrel.
Canadian government bond yields were lower across a flatter yield curve in sympathy with U.S. Treasuries. The 10-year yield (CA10YT=RR) fell 10.5 basis points to 1.254%, nearly its lowest since October.