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Canadian dollar gains 0.5% against the greenback

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Touches its strongest since January 2 at 1.3705

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Retail sales rise 1.3% in November

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Bond yields increase across the curve

By Fergal Smith

TORONTO, Jan 23 (Reuters) - The Canadian dollar extended

its weekly gain against the U.S. dollar on Friday as the

greenback ‌posted broad-based declines and domestic data showed

that retail sales rose in November.

The loonie was trading 0.5% higher ​at 1.3715 per U.S.

dollar, or 72.91 U.S. cents, after touching its strongest

intraday ‍level since January 2 at 1.3705. For the week, the

currency ⁠was up 1.5%, ⁠its biggest weekly gain since May.

Investor angst in the currency markets this week over

intensifying geopolitical tensions ‌has largely been borne by the

U.S. dollar. ​The greenback added to its weekly decline

against a basket of major currencies as traders stayed alert to

the prospects of intervention in ⁠the yen.

"I'd call it (U.S.) dollar weakness, ‍not Canadian ​dollar

strength," said Aaron Hurd, senior portfolio manager in the

currency group at State Street Global.

"You have ongoing risk of tensions between Carney and Trump,

the ‍USMCA negotiations coming up this summer," Hurd said. "With

that risk on the horizon, unless Canadian economic data really

takes off, I think the Canadian dollar is stuck here. It will

move with the broad dollar."

The United States-Mexico-Canada Agreement, which has

shielded much of Canada's exports from U.S. tariffs, is set for

review by a ​July 1 ‍deadline. Renewed verbal attacks from U.S.

President Donald Trump are prompting Canadians to rally behind

Prime Minister Mark Carney.

The Bank of Canada will keep ​its overnight interest rate on

hold through 2026, according to an even stronger majority of

economists polled by Reuters than one month ago, on expectations

the economy will grow steadily with inflation largely contained.

Canadian retail sales increased by 1.3% in November from

October and were up 3.1% on an annual basis. Preliminary

estimates for December showed retail sales declining 0.5% and

manufacturing ​sales up 0.5%.

The price of oil, one of Canada's major exports, rose

2.7% to $60.98 a barrel on concerns of supply disruptions in the

Middle East.

Canadian bond yields moved higher across the curve, with the

10-year ‍up 2.9 basis points at 3.440%.