Canadian dollar steadies after hitting one-month high

Thu Dec 6, 2012 8:32am EST
 
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By Claire Sibonney

TORONTO (Reuters) - The Canadian dollar eased from a one-month high against the greenback on Thursday to trade little changed, tracking U.S. equity futures as the progress of fiscal negotiations in Washington continues to drive direction.

Earlier in the session, the currency rallied to its strongest level since early November, extending gains made over the last two days after the Bank of Canada kept its bias towards future rate hikes at a policy meeting on Tuesday.

Canada's central bank was unwavering in its view that it may need to raise interest rates, not cut them, even as the country's economy shows signs of slowing.

"The Canadian dollar has generally had a strong tone this week. The fact that the Bank of Canada maintains a very loose long-term tightening bias is providing some support to the currency, a contrast with the complete opposite from the Federal Reserve," said Sal Guatieri, senior economist at BMO Capital Markets.

U.S. stock index futures were little changed in what could be another choppy session. .N

U.S. President Barack Obama said there could be a quick deal to avert the "fiscal cliff" - tax hikes and spending cuts set to begin next year, possibly driving the U.S. economy back into recession - if Republican leaders agree to raise tax rates for those making more than $250,000 a year.

Meanwhile, the European Central Bank held its main interest rate at a record low of 0.75 percent as expected, leaving investors to shift their attention to new economic forecasts for clues about possible cuts next year.

At 8:15 a.m. (1315 GMT), the Canadian dollar stood at C$0.9915 versus its U.S. counterpart, or $1.0086 U.S. cents, compared with Wednesday's North American finish at C$0.9917, or $1.0084. Earlier, the currency touched C$0.9905, or $1.0096, its strongest level since November 7.   Continued...