* Details of retail sales data rattle Canadian dollar
* Canadian dollar exits week with 1.2 percent gain
* Bond prices continue to reclaim last week's losses
By Frank Pingue
TORONTO, June 20 (Reuters) - The Canadian dollar capped a
winning week with a lower close on Friday as details of
stronger-than-expected domestic retail sales data ate away at
gains made by the currency moments after the retail sales
Canadian bond prices ended higher across the curve as the
market continued price out the idea that central banks in North
America will be raising interest rates any time soon.
The Canadian dollar closed at C$1.0170 to the U.S. dollar,
or 98.33 U.S. cents, down from C$1.0152 to the U.S. dollar, or
98.50 U.S. cents, at Thursday's close.
For the week, the currency rose 1.2 percent.
The Canadian currency shot to C$1.0101 to the U.S. dollar,
or 99.00 U.S. cents, immediately after data showed retail sales
in Canada rose 0.6 percent in April. But it backed off the
two-week high moments after as details of the report were
The data showed that the gain was heavily concentrated in
Quebec, which was mostly a rebound from the previous month when
big snowfalls limited gains.
"When people saw that, I think the general consensus was
that the gains Quebec registered in the bounce-back in April
were unlikely to be sustained in upcoming months," said George
Davis, chief technical strategist at RBC Capital Markets. "And
as a result of that, that would have had a bit of a moderating
impact on the headline data."
The decline in the commodity-linked Canadian dollar was
cushioned somewhat by higher oil prices, which often influence
the currency since Canada is a major oil exporter.
Bank of Canada Governor Mark Carney's speech late Thursday
in Calgary, Alberta, did not have any noticeable impact on the
currency as he said an unprecedented rise in commodity prices
required a "relentless focus on inflation".
Carney said the global spike in energy and food prices was
unlike any previous commodity boom because the increases have
been so steep and encompassed such a broad range of goods.
BOND PRICES RISE
Prices for Canadian bonds rose alongside the bigger U.S.
Treasury market as reports earlier this week that poured cold
water on the notion of higher U.S. interest rates continued to
offer a bid for secure assets such as government debt.
Reports earlier this week in the Wall Street Journal and
Financial Times cited senior Fed officials who said the U.S.
central bank was unlikely to raise rates in the next few months
unless the inflation outlook worsened.
That opened the door for bond prices to reclaim a portion
of the steep losses suffered last week when the Bank of Canada
surprised the market when it left its key rate steady instead
of following expectations for a cut.
"I feel like the dominant theme of the week is that central
bankers believe the market has gone too far in pricing in rate
hikes," said Eric Lascelles, chief economics and rates
strategist at TD Securities.
"The market hemmed and hawed on that and I think ultimately
it has decided to properly absorb that message and to reduce
the odds of rate hikes.
The two-year bond rose 11 Canadian cents to C$100.84 to
yield 3.298 percent. The 10-year bond gained 41 Canadian cents
to C$101.37 to yield 3.817 percent.
The yield spread between the two-year and 10-year bond was
51.9 basis points, down from 52.0 at the previous close.
The 30-year bond added 82 Canadian cents to C$114.22 for a
yield of 4.151 percent. In the United States, the 30-year
Treasury yielded 4.725 percent.
The three-month when-issued T-bill yielded 2.70 percent,
down from 2.72 percent at the previous close.
(Reporting by Frank Pingue; Editing by Peter Galloway)