Canadian dollar slides on fading risk rally

Fri Dec 2, 2011 1:00pm EST
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By Claire Sibonney

TORONTO (Reuters) - The Canadian dollar reversed earlier gains against the U.S. dollar on Friday as global risk appetite faded and investors took profits after a four-day rally.

Earlier in the session, the currency was on track to mark its biggest weekly gain in more than two years. It seemed to largely shrug off surprisingly weak domestic employment data as European policymakers again appeared ready to collaborate on tackling the region's debt crisis, and after U.S. job numbers came in strong.

"It's very much a case of the broader theme that we've seen risk appetite starting to diminish as we're going through the afternoon session here in Europe," said Jeremy Stretch, head of currency strategy at CIBC World Markets in London.

"I think there was always a risk that there could be a degree of profit-taking coming in during the course of the afternoon because obviously we've seen some pretty dramatic moves over the last 48 hours or so."

At 12:35 p.m., the currency stood at C$1.0170, or 98.33 U.S. cents, down from Thursday's finish at C$1.0143 against the U.S. dollar, or 98.59 U.S. cents.

Before the jobs numbers, the currency rallied as strong as strong as C$1.0080 against the U.S. dollar, or 99.21 U.S. cents, a recent resistance level still intact. On the support side, C$1.0215-25 is eyed.

Canada's economy unexpectedly lost jobs for a second straight month in November, raising concern that weakness in other countries may do lasting harm to an economy that has so far been surprisingly robust.

The economy shed 18,600 jobs in November, which pushed the unemployment rate up to 7.4 percent. Analysts surveyed by Reuters had forecast, on average, a gain of 19,100 jobs with the unemployment rate holding steady.   Continued...