C$ near one-week high on upbeat U.S. data

Thu Nov 1, 2012 5:02pm EDT
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By Claire Sibonney

TORONTO (Reuters) - Canada's dollar firmed to a near one-week high versus the greenback on Thursday after bullish U.S. consumer confidence and private-sector jobs data fired up riskier assets heading into crucial North American employment reports on Friday.

U.S. companies added jobs in October at the fastest pace in eight months, according to payrolls processor Automatic Data Processing, a sign of modest healing in the labor market just days before a presidential election that could hinge on the economy.

"Certainly the ADP was stronger than expected today which I think is rubbing up expectations for non-farm (U.S. payrolls), particularly since ADP has changed their methodology and is now supposed to have a much better correlation with non-farm," said Camilla Sutton, chief currency strategist at Scotiabank.

"I think the Canadian numbers will end up playing second fiddle to non-farm just because of how important non-farm is right now to Federal Reserve policy."

Other data on Thursday showed a sharp improvement in consumer confidence and a drop in new claims for jobless benefits, while there were mixed signals regarding the health of U.S. manufacturing.

"(The Canadian dollar) seems to be taking it relatively positively on the back of the significant uptick in risk sentiment, so equities are obviously rallying very strongly and the Canadian dollar is moving ... quite smartly," said Jeremy Stretch, head of currency strategy at CIBC World Markets in London.

The currency, which often tracks the direction of U.S. equities, followed Wall Street higher though U.S. market participation remained low as investors continued to deal with the aftermath of the massive storm Sandy. .N

The Canadian dollar ended the North American session at C$0.9968, or $1.0032, compared with C$0.9990, or $1.0010, at Wednesday's close. The currency touched an intraday high of C$0.9960, or $1.0040, its strongest level since October 26.   Continued...