Canadian dollar weaker as Greek vote relief fades

Mon Jun 18, 2012 8:27am EDT
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By Allison Martell

TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Monday as relief at Greece's pro-bailout election results turned to worry over the broader euro zone debt crisis.

Greek voters gave a majority on Sunday to parties that support the country's economic bailout, easing worries that the single currency bloc might break apart, but not fears about other indebted countries in the euro zone.

"The underlying structural negatives in Europe are still very large," said Jeremy Stretch, head of foreign exchange strategy at CIBC World Markets in London. "The relief rally proved, very much like the Spanish relief rally this time last week, to be very temporary."

Stretch saw particular focus on Spain, and to a lesser extent Italy. The cost of borrowing for both countries rose on Monday, and the yield on Spain's 10-year bond rose above the 7 percent level widely viewed as unsustainable. <MKTS/GLOB>

He said the oil market, which fell on Monday, was not helping the resource-linked Canadian currency. <O/R>

At about 8:10 a.m. (1210 GMT) the Canadian dollar was at C$1.0256 versus the U.S. dollar, or 97.50 U.S. cents, weaker than Friday's close at C$1.0222, or 97.83 U.S. cents. Earlier on Monday, it had weakened as far as about C$1.0265.

Global markets are expected to stay on edge this week thanks to a heavy schedule of high-level meetings.

The heads of the Group of 20 major industrialized and developing nations meet in Mexico on Monday and Tuesday, where they are expected put pressure on Europe's leaders to come up with a lasting solution to the debt crisis.   Continued...