Canada dollar firms ahead of White House meeting

Fri Nov 16, 2012 10:01am EST
 

By Solarina Ho

TORONTO (Reuters) - The Canadian dollar strengthened to near parity with the U.S. dollar on Friday ahead of a meeting between U.S. President Barack Obama and congressional leaders to discuss the U.S. fiscal crisis.

Market sentiment was slightly more hopeful that the United States would be able to defuse the "fiscal cliff" crisis following a Wall Street Journal report that said White House officials were in advanced internal discussions that could indicate increased flexibility on reaching a deal with Republican leaders.

Equity markets have been mired in negative territory for much of the last two weeks with investors worried that if no deal is reached on the large, automatic budget cuts and tax hikes set to begin next year, the U.S. economy could slip into recession.

"There's very little in the way of macro risks, particularly locally in Canada ... that leaves us watching the Obama meeting on the fiscal cliff later on today," said Adam Cole, global head of FX strategy at Royal Bank of Canada in London.

Cole said any suggestion that the negotiating parties were having difficulty reaching a compromise would be negative for risk appetite and bullish for the U.S. dollar.

At 9:24 a.m. (1424 GMT), the Canadian currency traded at C$1.0006 to the U.S. dollar, or 99.94 U.S. cents, slightly firmer than its North American close on Thursday of C$1.0013, or 99.87 U.S. cents.

Canada's dollar was outperforming most major currencies, and touched a near two-week high against the Australian dollar.

Given a dearth of news on Friday, Cole said the Canadian dollar would likely be bound by the week's trading range of C$0.9985 to C$1.0040.   Continued...