Canada dollar pares gain after strong U.S. consumer data

Tue Nov 27, 2012 1:17pm EST
 
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By Solarina Ho

TORONTO (Reuters) - The Canadian dollar pared early gains to trade flat against its U.S. counterpart on Tuesday after data showed U.S. consumer confidence in November rose to a four-and-a-half-year high.

The Canadian currency typically responds positively to signs of growth in the economy of its southern neighbor and biggest export market, and one analyst said the move might have more to do with repositioning after a bounce in light trading last week.

"All the economic data that's been released this morning, at least in the U.S. session, generally met or exceeded expectations," said David Tulk, chief Canada macro strategist at TD Securities, referring to the consumer confidence index, house price data and gauges of planned business spending and manufacturing activity.

"So from that perspective, I'm inclined to think of this as more of a couple of weeks worth of moves that's being dealt with as opposed to just a momentary reaction to the data."

Investors also let out a sigh of relief after the International Monetary Fund (IMF) and Greece's euro zone neighbors brokered a deal to cut Greek debt.

After 12 hours of talks, global lenders agreed on a package of measures to reduce Greek debt to 124 percent of gross domestic product by 2020 and promised further measures to lower it below 110 percent in 2022.

"The agreement overnight has buoyed risk-sensitive currencies and we are seeing that flow into the Canadian dollar," said John Curran, senior vice president at CanadianForex.

At 12:39 a.m. (1739 GMT), the currency was trading at C$0.9933 to the U.S. dollar, or $1.0067, only slightly stronger than Monday's North American close of C$0.9938, or $1.0062.   Continued...