Loonie firm as markets, Spanish auction support

Thu Dec 15, 2011 8:13am EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

TORONTO (Reuters) - The Canadian dollar firmed on Thursday after touching its lowest level in more than two weeks the day before as global equity and commodity markets stabilized after recent sell-offs on worries about the financial stability of the euro zone.

At 7:48 a.m. (1248 GMT), Canada's dollar was at C$1.0361 to the U.S. dollar, or 96.52 U.S. cents, firmer from Wednesday's North American finish at C$1.0396 to the U.S. dollar, or 96.19 U.S. cents.

The Canadian currency drew support on Thursday from firmer U.S. crude prices after a rout the day before, while the sell-off in European stocks and the single currency paused for breath as a good Spanish debt auction eased market nerves over the euro zone debt crisis and the bleak global economic outlook. <O/R> <MKTS/GLOB>

Economic data in the euro zone also helped to stabilize market sentiment after first estimates of the Purchasing Manager's Indexes in December showed a slight improvement over November, even though the data still signaled a deep economic contraction ahead.

Data also showed China's manufacturing sector continues to contract, but the pace of contraction improved marginally.

"I think it's just a little bit of slightly stronger fundamental data across the globe in terms of PMI, and a little bit of exhaustion in terms of markets," said Camilla Sutton, chief currency strategist at Scotia Capital.

"The combination is that we have a tentative rest in markets where we're seeing equities vaguely higher, commodities higher and the U.S. dollar vaguely softer."

Sutton said she expects the Canadian dollar to trade in a range of C$.01320-C$1.0420 against its U.S. counterpart in the near term.

The two-year bond slipped 3 Canadian cents to yield 0.881 percent, while the 10-year bond edged 2 Canadian cents higher to yield 1.952 percent. The 30-year bond climbed 15 Canadian cents to yield 2.532 percent, after touching a record low yield of 2.509 percent.

(Reporting By Jennifer Kwan; Editing by Theodore d'Afflisio)