Canadian dollar surges above parity on Europe euphoria

Thu Oct 27, 2011 4:39pm EDT
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By Andrea Hopkins

TORONTO (Reuters) - The Canadian dollar surged past parity with the U.S. dollar on Thursday to end at its highest level in more than a month as a plan to staunch the European debt crisis sparked euphoria across financial markets.

Global stocks, the euro, crude oil and metal prices all rocketed higher, shaking off months of bearish sentiment in a rally that bolstered commodity-linked currencies such as the Canadian dollar and sank the safe-haven greenback.

"It's a relief rally in a sense. Europe has finally got the plan to have a plan to have a plan laid out," said Shaun Osborne, chief currency strategist at TD Securities.

"On the basis of what we've seen from equities markets today it is no real surprise the Canadian dollar is trading higher, and we may see another cent or two upside from here."

The Canadian dollar ended Thursday's North American session at C$0.9913 to the U.S. dollar, or $1.0088, about 1.3 percent above Wednesday's session close at C$1.0048 to the U.S. dollar, or 99.52 U.S. cents. It was the biggest one-day gain in the currency since early August.

The Canadian dollar touched a session high of C$0.9892 to the U.S. dollar, or $1.0110, its highest level since September 20.

The rally came after European Union policymakers agreed to a plan for the recapitalization of European banks, for a far more powerful rescue fund for the euro zone, and for banks and insurers to accept 50 percent losses on their Greek debt holdings.

For the moment, investors shrugged off the fact that key aspects of the deal, including the mechanics of boosting the firepower of the European Financial Stability Facility and providing Greek debt relief, could take weeks to finalize.   Continued...