Loonie Strengthens After Upbeat Canadian Retail Sales

The Canadian dollar firmed against its key counterparts in the European session on Tuesday, as the nation's retail sales growth accelerated more than forecast in January.

Data from Statistics Canada showed that retail sales rose a seasonally adjusted 2.2 percent on month to C$46.0 billion in January.

This was sharply higher than expectations for 1.5 percent growth and follows a 0.5 percent fall in the previous month.

Core retail sales, excluding sales at motor vehicle and parts dealers, advanced 1.7 percent. Economists were looking for a 1.3 percent gain. The sales had fallen 0.3 percent in December.

Further underpinning the currency was higher oil prices, driven by expectations that OPEC would extend its production cuts past June to rein in global glut.

Crude for May delivery rose $0.15 to $49.06 per barrel.

The loonie showed mixed performance in the Asian session. While the currency rose against the aussie and the euro, it held steady against the greenback. Against the yen, it dropped.

Extending early rally, the loonie firmed to a 5-day high of 1.3283 against the greenback, off its early low of 1.3365. The loonie is seen finding resistance around the 1.30 zone.

The loonie, having fallen to an 8-day low of 1.4412 against the euro at 4:15 am ET, reversed direction and rose back to 1.4340. The loonie had already set a 4-day high of 1.4308 early in the Asian session. If the loonie extends rise, 1.39 is possibly seen as its next resistance level.

European Council President Donald Tusk said that a meeting of the European leaders will be held on April 29 to adopt the Brexit guidelines for the 27 member states.

Apart from its chief Tusk, the European Council consists of the heads of state or government of the member states and the European Commission President.

Bouncing off from an early 4-day low of 84.22 against the yen, the loonie advanced to a 2-day high of 84.77. Continuation of the loonie's uptrend may see it challenging resistance around the 86.00 region.

The loonie continued to be higher against the aussie with the pair trading at 1.0269. At yesterday's close, the pair was worth 1.0320. The next possible resistance for the loonie may be seen around the 1.01 area.

Looking ahead, Federal Reserve Bank of Kansas City President Esther George is expected to speak on the U.S. economy and the Federal Reserve before an event hosted by Women in Housing and Finance, in Washington at 12:00 pm ET.

At 3:45 pm ET, Bank of Canada Deputy Governor Lawrence Schembri will deliver a speech at the Greater Vancouver Board of Trade.