Canada dollar climbs to approach three-month high in risk rally

Fri Jan 11, 2013 10:05am EST
 
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By Claire Sibonney

TORONTO (Reuters) - Canada's dollar climbed to a near three-month high against its U.S. counterpart on Friday as upbeat remarks from the European Central Bank and a massive stimulus plan in Japan boosted optimism about the global economy, despite some weak North American data.

The Canadian dollar took its cue from rallying global equities and growth-related currencies a day after the ECB said that the euro zone economy will recover in 2013, while the Japanese government approved a $117-billion spending plan. <MKTS/GLOB> <FOREX/>

Hopes for steady global growth were reinforced by robust trade and inflation data out of China.

"Generally, the wider backdrop is still relatively constructive for risk," said David Tulk, chief Canada macro strategist at TD Securities.

"You're still riding the momentum of more of an optimistic outlook for 2013 so I think that's what's probably keeping risk sentiment somewhat bid ... it's small but it's definitely moved that way since the start of the year."

At 9:48 a.m. (1448 GMT), the Canadian dollar stood around C$0.9819 versus the U.S. dollar, or $1.0184, firmer than Thursday's North American session at C$0.9845 versus its U.S. counterpart, or $1.0157.

After breaking through near-term resistance around C$0.9820, the currency hit an intraday high of C$0.9815, or $1.0188, its loftiest since October 18.

Data that showed Canada and the United States posted wider-than-expected trade deficits had only a slight impact in limiting the gains earlier Friday.   Continued...