Risk rally pushes Canada dollar to record against euro
By Jennifer Kwan
TORONTO (Reuters) - Canada's dollar climbed to a more than two-month high against the U.S. dollar on Thursday and hit a record peak against the euro on strong commodity prices and investor optimism about corporate earnings.
U.S. stocks rose in part after rosier guidance from IBM IBM.N and bullish earnings from eBay EBAY.O, which helped to send oil prices sharply higher. .N <O/R>
"Overall the commodities complex is higher on the day. You've seen 'risk on' sentiment in the market. It seems people are a touch more optimistic despite all the negativity in Europe, the weak data in the U.S.," said Charles St-Arnaud, economist and currency strategist at Nomura Securities in New York.
Pressure remained on the U.S. dollar after Federal Reserve Chairman Ben Bernanke kept alive talk of more monetary easing in the second stage of his testimony to the U.S. Congress on Wednesday, which also boosted commodities priced in U.S. dollars.
"What we see today really is a combination of just generalized U.S. dollar weakness against most of the G10 currencies and a moderately better tone for risk and all of that adds up really to (U.S.) dollar/Canada being lower," said Adam Cole, global head of FX strategy at RBC Capital Markets in London.
Meanwhile, the Bank of Canada in the previous session kept its rate-hike stance, despite other major advanced economies moving in the opposite direction.
Higher interest rates typically help a country's currency appreciate because they often attract international capital flows.
The Canadian dollar ended at C$1.0078 against the U.S. dollar, or 99.23 U.S. cents, firmer than Wednesday's North American finish at C$1.0107 versus its U.S. counterpart, or 98.94 U.S. cents. Continued...