Loonie pushes near parity on Europe optimism
By Andrea Hopkins
TORONTO (Reuters) - The Canadian dollar hit a one-month high against its U.S. counterpart on Monday as investors bet on a positive outcome to talks on the euro zone debt crisis and risk appetite was whetted by healthy economic data from China.
The safe-haven U.S. dollar weakened against a basket of major currencies and world stocks rose after a weekend meeting of policymakers in Brussels, where agreements were said to be near on bank recapitalization and on how to leverage the European Union's EFSF rescue fund to try to stop bond market contagion. <MKTS/GLOB>
"It's just good tidings coming out of Europe. We're carrying over the sentiment from late last week where policymakers were actually able to give us a pretty good clear indication of what to expect, when," said David Tulk, chief Canada macro strategist at TD Securities.
Increased appetite for risk assets was bolstered by a sharp rise in China's flash purchasing managers' index, suggesting that manufacturing in the world's second-largest economy expanded moderately in October after three months of contraction.
The figures eased fears that China's economy was heading for a hard landing, a major concern for global investors, along with the euro zone crisis and the slowdown in the United States. The data boosted the Canadian dollar and other commodity-linked currencies.
"The fact that China can grow in the absence of developed markets growth is encouraging," said Tulk, noting that disappointing PMI data in Europe was overshadowed by good signs from developing markets.
The Canadian dollar ended the North American session at C$1.0031 to the U.S. dollar, or 99.69 U.S. cents, above Friday's North American session close of C$1.0087 to the U.S. dollar, or 99.14 U.S. cents.
The currency climbed as high as C$1.0021 to the U.S. dollar, its strongest level since September 21, when it fell below parity with the U.S. dollar due to global growth fears. Continued...