C$ powers to 4-month high on U.S. data, ECB plan

Thu Sep 6, 2012 4:48pm EDT
 
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By Solarina Ho

TORONTO (Reuters) - Canada's dollar rallied to a four-month high against the greenback on Thursday, as stronger-than-expected U.S. economic data and the European Central Bank's plan to tackle the region's debt crisis fueled buying of the commodity-linked currency.

Global stock markets and commodity prices also jumped on news of the ECB's aggressive bond-buying program and firm U.S. data, which included a report that showed the pace of growth in the massive U.S. service sector had accelerated in August on the back of a rebound in employment and exports.

"Obviously we're having a very good run in risk ... certainly the services ISM numbers that we got out of the U.S. I think has encouraged a more buoyant risk environment," said Jeremy Stretch, head of foreign exchange strategy with CIBC World Markets in London.

The Canadian currency finished its North American session at C$0.9828 against the greenback, or $1.0175, up nearly a full cent from Wednesday's finish of C$0.9909, or $1.0092. It was the currency's biggest one-day gain since June 29.

The string of positive U.S. data helped power the currency to a session high of C$0.9809, or $1.0195 on Thursday - its strongest level since April 30. The currency had firmed to a high of C$0.9843 three times in recent weeks before breaking through.

The next critical level was C$0.98, said Adam Button, a currency analyst at ForexLive in Montreal. Breaching that level could strengthen the Canadian dollar further, he said - at least until markets get more clarity from a U.S. Federal Reserve meeting next week.

BANKING ON JOBS

Other positive U.S. data included news that the private sector added 201,000 jobs in August - more than economists had expected - while the number of Americans filing new claims for jobless benefits fell last week to the lowest level in a month.   Continued...