Loonie rises on brightening Europe outlook
By Jon Cook
TORONTO (Reuters) - The Canadian dollar advanced against the greenback on Thursday as successful European debt auctions eased fears about the region's debt crisis and boosted the appeal of currencies which benefit most from global growth.
Spain sold twice as much three-year debt as it needed and Italy paid less than it did a month ago on one-year securities at their first auctions of 2012, as cheap money lent to banks by the European Central Bank in December fueled demand for shorter-term debt. <MKTS/GLOB>
The Canadian dollar rose along with the euro, which touched a one-week high against its U.S. counterpart as investors scrambled to cover a record number of short positions after the euro hit a 16-month low on Wednesday. <FRX/>
"The Spanish and Italian auctions were quite strong and definitely supported the euro in the overnight session," said Greg Moore, a foreign exchange strategist at TD Securities. "It marks potentially a shift back to watching events unfold in Europe."
The Canadian dollar ended the North American session at C$1.0183 to the U.S. dollar, or 98.20 U.S. cents, up slightly from Wednesday's North American finish at C$1.0193 to the U.S. dollar, or 98.11 U.S. cents.
The U.S. dollar is expected to continue to find support around the C$1.01 level against the Canadian currency and meet resistance at around the C$1.035 level, said Moore.
Investors will get another test of Europe's financial health on Friday as Italy launches its 2012 bond issuing campaign, offering up to 4.75 billion euros of debt including its three-year benchmark.
"The market will take it one auction at a time right now," said Matt Perrier, a director of foreign exchange sales at BMO Capital Markets. Continued...