CANADA FX DEBT-C$ posts biggest weekly gain this year on robust domestic economy

(Adds analyst quotes and details throughout; updates prices) * Loonie touches its strongest since March 3 at 1.2595 * Canadian retail sales rise 3.2% in January * Price of U.S. oil settles 1.7% higher * Canadian 10-year yield edges up to 2.196% By Fergal Smith TORONTO, March 18 (Reuters) – The Canadian dollar strengthened for a fourth day against the greenback on Friday as stronger-than-expected domestic retail sales data supported the view that the Bank of Canada will keep pace with expected rate hikes this year by the Federal Reserve. The loonie was trading 0.2% higher at 1.2595 to the greenback, or 79.40 U.S. cents, its strongest level since March 3. It added to gains over the previous three days. For the week, it was up 1.2%, which was its biggest weekly advance since December. Canadian retail sales rose 3.2% in January, beating estimates for a 2.4% increase, as shoppers ventured out to car dealerships and home improvement shops, though a preliminary estimate showed sales falling 0.5% in February. “Things are coming together for the Canadian economy,” said Ronald Simpson, managing director, global currency analysis at Action Economics. The Bank of Canada is “going to be just as aggressive” hiking interest rates as the Fed, Simpson added. The U.S. central bank on Wednesday hiked interest rates for the first time since 2018. The move came two weeks after the BoC began its own tightening cycle. Money markets expect the benchmark rates of both the Fed and the BoC to end the year at about 2% as the central banks likely hike multiple times to fight inflation. The U.S. dollar index bounced back from recent declines against a basket of major currencies, while the price of oil, one of Canada’s major exports, settled 1.7% higher at $104.70 a barrel. It follows a volatile trading week for crude with no easy replacement for Russian barrels in a tight market. The Canadian 10-year yield was up nearly one basis point at 2.196%, after touching on Wednesday its highest level since December 2018 at 2.273%. (Reporting by Fergal Smith; editing by Tim Ahmann and Nick Zieminski)