C$ hits 3-day high; helped by ECB, Bank of Canada

Thu Oct 4, 2012 3:32pm EDT
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By Alastair Sharp

TORONTO (Reuters) - The Canadian dollar hit its strongest level in several days against the U.S. currency on Thursday, helped by signs the European Central Bank intends to tackle the region's debt crisis and more hawkish talk from the Bank of Canada.

The resource-linked currency firmed as high as C$0.98 to the greenback, or $1.0204, as gold and oil bounced and copper edged higher and Canadian and U.S. equities markets also gained.

A slower rise in the number of Americans filing new claims for unemployment benefits also contributed to gains.

But the main thrust came from ECB President Mario Draghi, who said the central bank was primed to buy troubled euro zone bonds and that conditions linked to such purchases need not be painful.

"More than anything, it's Draghi being more than willing to drive on, and this feel-good factor is sneaking over to the equities and the loonie gets dragged along," said Dean Popplewell, chief currency strategist at OANDA, referring to the colloquial term for the Canadian currency.

At 2:56 p.m. (1856 GMT) the Canadian dollar was at C$0.9805 to the U.S. dollar, or $1.0198, up from C$0.9881, or C$1.0120 on Wednesday. At C$0.98 to the dollar it was at its strongest since October 1. It had hit a four-week low on Wednesday.

Popplewell pointed out, however, that Canada's dollar remains stuck in a relatively tight range between C$0.9750 and the psychologically important C$0.99 level.