Loonie draws strength from global stocks, data

Thu Dec 22, 2011 8:45am EST
 
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By Jennifer Kwan

TORONTO (Reuters) - Canada's dollar edged higher against the greenback in relatively tight trade on Thursday as investor risk appetite remained steady on easing euro zone fears and on hopes of an improving economic landscape in Canada and the U.S.

The currency took its lead from global markets. Financial stocks led a solid recovery on European share markets in thin trade and bank-to-bank lending rates fell, as signs grew that the nearly half a trillion euros banks borrowed from the region's central bank will ease funding strains. <MKTS/GLOB>

U.S. stock index futures also rose as investors eyed a batch of economic data for signs the economy was slowly healing.

"I would attribute it to a relief rally. Equity prices by and large have been depressed throughout the year and we're seeing a year-end relief rally in that market," Jack Spitz, managing director of foreign exchange at National Bank Financial, said of European shares.

"From the U.S. perspective, some of the fundamentals and the economic drivers are starting to look a little more attractive."

In Canada, data on Wednesday showed retail sales jumped more than expected in October, showing consumers were still happy to spend despite uncertain times. The reading raised hopes the economy might eke out some growth at the start of the fourth quarter.

The retail sales data helped the Canada dollar outperform other G10 currencies but any direction going forward would likely hinge on global factors.

"It's (Canadian dollar) still trading within the range and that range has been consolidating into a C$1.02-C$1.03 for the past number of sessions," said Spitz.   Continued...