C$ firms a tad as risk aversion eases

Tue Mar 4, 2014 9:29am EST
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By Leah Schnurr

TORONTO (Reuters) - The Canadian dollar firmed slightly on Tuesday as comments from Russia's president that he saw no need to use military force in Crimea for now helped take some of the risk aversion out of the market.

Investors have been on edge in recent sessions as Russia seized Ukraine's Crimea region following last month's ouster of Ukraine's leader.

Vladimir Putin on Tuesday said Russia would only use military force in Ukraine as a last resort, remarks that were seen as being meant to ease fears of war.

"Probably the single biggest driver of currencies in the European session was the news surrounding Ukraine," said Camilla Sutton, chief currency strategist at Scotiabank in Toronto.

"The Canadian dollar is very sensitive to global risk dynamics, and typically when global risk is elevated or risk aversion is rising, the Canadian dollar weakens."

The Canadian dollar was at C$1.1076 to the greenback, or 90.23 U.S. cents, a touch stronger than Monday's close of C$1.1084, or 90.22 U.S. cents.

Investors were also turning their attention to Wednesday's Bank of Canada meeting. The central bank is expected to hold interest rates at 1 percent, but economists will be watching the accompanying statement for any change in language. <CA/POLL>

The Bank of Canada took a more dovish shift in policy last year, and left the door open to a cut in interest rates at its most recent meeting in January, saying it was more concerned about the weak inflation environment.   Continued...