Wednesday's much worse-than-expected retail sales print is prompting the safe haven U.S. dollar to strengthen against major foreign currencies, including the Canadian dollar. Sales came in lower than expected on both fronts in December, as the all-items index was reported to have declined by 2.7% against a -1.2% consensus forecast, while retail sales excluding autos were reported to have fallen 3.1% in the month - the biggest monthly decline ever - against expectations for a -1.4% print. Equity markets sold off following the release of the data, prompting the safe haven U.S. dollar to generally strengthen. The Canadian dollar is down 0.0037 to a session low of 0.8131 against the U.S. dollar. The CAD/USD had been at a level of 0.8160 when the data came out. Elsewhere, the loonie is up 0.001 to 0.6196 against the euro, during particularly choppy trading between the two currencies. Adversely affecting the euro are reports that rating agency Standard & Poor's downgraded Greece's sovereign rating a day after Portugal had been put on credit watch negative. Greece was put on credit watch negative last week. Strategists from Calyon also fear that Italy could be the next to have its rating (AAA by S&P) downgraded. "Fitch rates Italy one notch higher than S&P and Moody's rates Italy even higher than Fitch. Our next biggest concern is that Moody's decides to cut Italy's rating to align it with Fitch. It is easy to conclude that Italy is doing a fairly good job whereas reading the S&P text alongside the affirmation of their rating yesterday, you tend to feel quite depressed," they wrote, adding that its Moody's rating is the highest and, therefore, susceptible to a cut. Meanwhile, the Canadian dollar is down 0.0039 to 1.2293 to session lows against the pound sterling and up 0.0004 to 1.2293 against the Australian dollar.

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