C$ firms slightly, helped by U.S. data

Mon Oct 1, 2012 4:42pm EDT
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By Alastair Sharp

TORONTO (Reuters) - The Canadian dollar firmed slightly against the U.S. currency on Monday, help by stronger precious- and base-metal prices and by U.S. manufacturing data that showed expansion for the first time since May.

The Canadian currency, which typically benefits from signs of stronger global growth, also took comfort from a stress test of Spanish banks that did not reveal any big new problems.

"If you can get risky assets performing better and policy continues to head in the right direction in Europe, then that would be the next big thing to drive the currency higher," said Mark Chandler, head of Canadian fixed income and currency strategy at Royal Bank of Canada.

The Canadian dollar closed at C$0.9827 against the U.S. dollar, or $1.0176, after ending last week at $0.9832, or $1.0171.

The softer U.S. dollar also helped boost the price of gold toward a one-year high and lifted copper prices.

The Canadian dollar was also stronger against most other major currencies, though it lagged the euro. Europe's single currency outperformed as European officials signaled that Spain could request a bailout as early as next weekend, a move many hope will help contain the euro zone debt crisis.

Chandler said the Canadian dollar would likely trade in a narrow range until Friday, when employment data from both Canada and the United States should provide further direction.

"In the meantime, the currency still remains largely driven by risk proxies, which are slightly positive now," he said.   Continued...