Canada dollar falters on Greece worries

Wed May 16, 2012 5:01pm EDT
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By Jennifer Kwan

TORONTO (Reuters) - The Canadian dollar skidded against its U.S. counterpart on Wednesday as broader uncertainty over Greece's future in the euro zone weighed on global equity, commodity and currency markets.

The Canadian dollar, which touched a 16-week low of C$1.0131, or 98.71 U.S. cents, against the greenback, moved in tandem with the euro on news the European Central Bank has stopped funding operations for some Greek banks.

The euro dropped to a four-month low against the U.S. dollar on Wednesday, sliding for a fourth consecutive session and likely to face more losses on fears about a Greek exit from the euro zone.

"The Canadian dollar is pretty much focused on concerns around European issues," said Greg Moore, FX Strategist at TD Securities.

The Canadian dollar ended at C$1.0127 versus the U.S. dollar, or 98.75 U.S. cents, below Tuesday's North American session close at $1.0068, or 99.32 U.S. cents. Canada's currency underperformed most of its G10 currency cousins, including the Australian dollar and Japanese yen.

Earlier, the Canadian dollar had risen as high as C$1.0053 against the greenback after U.S. housing starts data, as well as a stronger-than-expected Canadian manufacturing report.

But those data points "could only support the Canadian dollar in this risk-averse environment for so long," said Moore, who sees the currency trading in the near-term in a range of C$1.0050-60 and C$1.0150-70 against the U.S. dollar.

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.   Continued...