Canadian dollar ends flat; China easing offset by Fed comments

Thu Jun 7, 2012 5:06pm EDT
 
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By Allison Martell

TORONTO (Reuters) - The Canadian dollar closed flat against its U.S. counterpart on Thursday, as a boost from China's surprise interest rate cut was offset by comments from U.S. Federal Reserve Chairman Ben Bernanke that suggested more monetary stimulus is not imminent.

Bernanke, testifying before Congress, said the Fed was ready to shield the U.S. economy if financial problems mounted, but disappointed investors hungry for signals that the U.S. central bank would conduct a third round of bond buying. <MKTS/GLOB>

The comments came one day after the European Central Bank put the onus on euro zone governments to solve the bloc's debt crisis.

"The markets were looking for a little more out of the ECB and out of Bernanke as well, so there's a little bit of disappointment," said David Bradley, a director of foreign exchange trading at Scotiabank.

The Canadian dollar closed at C$1.0279 against the U.S. currency, or 97.29 U.S. cents, the same as Wednesday's close.

Early on Thursday, China's rate cut to shore up its flagging economy boosted global stocks and lifted growth-linked currencies in Canada, New Zealand and Australia. The Australian dollar hit a three-week high, while the Canadian dollar climbed as high as to C$1.0210 against the greenback.

Hopes of more U.S. monetary stimulus were further dashed by positive U.S. data on Thursday that showed the number of Americans lining up for new jobless benefits fell last week for the first time since April.

There was some upbeat news out of Europe, as Spain soothed fears that it is being cut off from financial markets by raising more than 2 billion euros ($2.5 billion) at a bond auction, although it had to pay dearly.   Continued...