Canada dollar pared losses after constructive fiscal meeting

Fri Nov 16, 2012 1:10pm EST
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By Solarina Ho

TORONTO (Reuters) - The Canadian dollar pared losses against the U.S. dollar on Friday after touching a 3/12 month low late in the morning, following a White House meeting on the "fiscal cliff" that congressional leaders said was constructive.

Top Republicans emerged from a meeting at the White House on Friday saying they are prepared to agree to additional revenue to avert harsh automatic year-end tax increases and spending cuts, as long as there are also reductions in spending.

Equity markets rallied on the news after being mired in negative territory for much of the last two weeks. Investors worried that, if no deal is reached on the large, automatic budget cuts and tax rises set to begin next year, the U.S. economy could slip into recession.

At 12:31 p.m. (1731 GMT), the Canadian currency traded at C$1.0024 to the U.S. dollar, or 99.76 U.S. cents, weaker than its North American close on Thursday of C$1.0013, or 99.87 U.S. cents.

The currency was firmer early in the session, but touched a 3-1/2 month low of C$1.0048, or 99.52 U.S. cents earlier after breaking a significant technical resistance level for the USD/CAD.

"A fair bit of volatility today, more buyers of USD/CAD than sellers ... there's been a reversal of the previous selling in the equity markets," said Jack Spitz, managing director of foreign exchange at National Bank Financial.

"The uncertainties prevail. And they will weigh on a currency that's high beta, like Canada."

Investors have also been focused on the slowing global economy, Europe's debt crisis and escalating violence in the Middle East.   Continued...