C$ nudges higher as U.S. jobs data helps

Thu Oct 11, 2012 5:16pm EDT
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By Alastair Sharp

TORONTO (Reuters) - The Canadian dollar closed slightly stronger versus the U.S. currency on Thursday, tracking a rebound in world equity markets after a drop in U.S. jobless claims increased optimism about the outlook for Canada's main trading partner.

The resources-linked currency was also helped by positive jobs data from fellow metals exporter Australia and by Standard & Poor's ratings downgrade of Spain, which traders calculated would push the country to seek aid and unleash a bond-buying program by the European Central Bank.

"The market's still on a sugar high that this ECB bond-buying program is going to be the cure for Europe's problems," said Gareth Sylvester, a senior currency strategist at Klarity FX in San Francisco.

The Canadian currency closed at C$0.9787 to the greenback, or $1.0218, up from its North American close of C$0.9807, or C$1.0197, on Wednesday.

Canada's dollar was helped by news that the number of Americans filing new claims for unemployment benefits fell sharply last week to the lowest level in more than 4-1/2 years.

A narrower-than-expected Canadian trade deficit also helped support the currency below C$0.98 to the greenback, though a drop in imports suggested an economy struggling to cope with weak international markets and slowing domestic demand.

Additional support came from stronger metal and energy prices. Copper bounced from two-week lows, gold snapped a four-day slip and oil prices rose to their highest levels in weeks. <GOL/> <O/R> <MET/L>

"The Spain downgrade caught a few people off guard," said Steve Butler, director of foreign exchange trading at Scotiabank. "But risk has come roaring back."   Continued...