Canadian dollar cuts losses on North American economic data

Wed May 16, 2012 10:23am EDT
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By Jennifer Kwan

TORONTO (Reuters) - (Repeats to additional subscribers with no change to headline or text) Canada's dollar rebounded from a 16-week low against the U.S. dollar on Wednesday, lifted by better-than-expected North American data, but broader fears of a worsening debt crisis capped the rise of the risk-linked currency

The Canadian dollar rose to a session high of C$1.0053 against the greenback, or 99.47 U.S. cents, after data showed U.S. housing starts climbed more than expected in April, signaling a nascent housing recovery.

"The (U.S.) housing starts are encouraging," said Derek Holt, vice president of economics at Scotiabank.

"We've seen a gradual healing over the course of the past year that has the potential to be sustained over the next year."

Canadian data showed manufacturing sales breezed past expectations in March from February, allaying concerns that domestic manufacturing was in a "prolonged slump," said Holt.

By around 9:30 a.m. (1330 GMT), the Canadian dollar stood at C$1.0082 versus the U.S. dollar, or 99.19 U.S. cents, still slightly below Tuesday's North American session close at $1.0068 versus the U.S. dollar, or 99.32 U.S. cents.

Still, markets were largely guided by worries about the euro zone. Fears that a Greek exit from the euro zone will worsen the debt crisis facing other European nations gripped financial markets on Wednesday.

A Greek departure from the euro zone would have a potentially huge knock-on effect on struggling economies such as Italy and Spain, whose bond yields climbed above the crucial 6 percent mark in the previous session.   Continued...