Dollar extends gain after strong retail sales data

By Frank Pingue

TORONTO (Reuters) - The Canadian dollar rose against the U.S. currency on Monday amid the backdrop of stronger equity and commodity prices, including a record level for gold, with support also coming from solid domestic retail sales data.

The rise in the Canadian currency was also compounded by a drop in the greenback, which fell against a slew of currencies as the view that U.S. interest rates would stay low for a long time prompted investors to diversify out of the dollar.

That helped send the Canadian dollar as high as C$1.0544 to the U.S. dollar, or 94.84 U.S. cents, after a string of four straight lower closes.

"It continues to be a U.S. dollar story as it responds to higher equities and gold, so with the U.S. dollar weaker across the board, the currency profile is showing cyclical, commodity and risk type carry trade currencies ... all performing well as equity markets are showing higher valuations," said Jack Spitz, managing director of foreign exchange at National Bank Financial in Toronto.

The domestic currency added to its earlier gains after data showed Canadian retail sales increased twice as much as expected in September.

By 9:15 a.m., the Canadian unit was at C$1.0546 to the U.S. dollar, or 94.82 U.S. cents, up from C$1.0699 to the U.S. dollar, or 93.47 U.S. cents, at Friday's close.

Gold hit a record high above $1,167 an ounce and added to momentum from earlier this month, while oil prices rose more than 2.6 percent above $79.50 a barrel on signs of buoyant demand from China. .

Oil and gold are key Canadian exports whose prices often influence its currency.

The rally in commodity prices helped lift equities overseas and is expected to keep Toronto's main resource-heavy stock index higher.

Canadian bond prices were slightly lower across most of the curve as the upbeat domestic data crimped investor appetite for more secure assets like government debt.

The two-year bond was down 2 Canadian cents at C$99.98 to yield 1.263 percent, while the 10-year bond was down 15 Canadian cents at C$102.80 to yield 3.402 percent.

(Additional reporting by Scott Anderson; Editing by Padraic Cassidy)