Canadian dollar ekes out gain, helped by strong trade data

Thu Nov 10, 2011 4:33pm EST
 
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By Claire Sibonney

TORONTO (Reuters) - The Canadian dollar edged higher against the U.S. dollar on Thursday as global markets stabilized on easing euro zone concerns and domestic trade data came in much stronger than expected.

A surge in energy exports helped Canada post a surprise trade surplus in September, the first since January 2011, prompting analysts to predict the economy would return to growth in the third quarter.

The data gave the currency an early boost but some of the gains evaporated as investors shifted their focus to choppy trading in U.S. equities and the euro after a dramatic week that saw Italy move to the center of Europe's woes.

"It's been a pretty volatile session," said David Bradley, director of foreign exchange trading at Scotia Capital.

"I think the bias is still for a stronger (U.S.) dollar as we head forward, I think we're going to see more political risk in Europe which is going to be negative for the euro and should be positive for dollar/Canada as well."

Italy moved closer to a national unity government on Wednesday, following Greece's lead in seeking a respected veteran European technocrat to pilot painful economic reforms in an effort to avert a meltdown in euro zone bond markets.

Italian bond yields also fell back from Wednesday's record highs of around 7.5 percent but remained elevated, just below the 7 percent level seen as unsustainable.

"The market is looking a bit more optimistic and that optimism has reflected itself in overall offers to the U.S. dollar with the Canadian dollars attracting some bids," said Jack Spitz, managing director of foreign exchange at National Bank Financial.   Continued...