Canadian dollar holds above parity though Greek fears weigh

Thu Feb 2, 2012 5:30pm EST
 
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By Jon Cook

TORONTO (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Thursday, unable to firm further above parity as concerns over Europe's debt crisis offset encouraging U.S. jobs data and remarks viewed as bullish from Federal Reserve Chairman Ben Bernanke.

Market sentiment dipped after Greek debt talks were reported as difficult, heightening concerns that Athens would not be able to meet 14.5 billion euros ($19.1 billion) in bond redemptions due next month.

Bernanke's testimony to Congress on Thursday partly assuaged investor fears of a messy Greek default after the Fed Chairman said he was seeing signs that some of the uncertainty dampening U.S. business investment, including European banking woes, might be waning.

Last week, Bernanke gave the U.S. economy a tonic by keeping the Fed's ultra-low interest rate on hold until the end of 2014. On Thursday, U.S. data showed new jobless claims fell more than expected last week, restoring some confidence in the recovery.

The Canadian dollar finished at C$0.9996 to the U.S. currency, or US$1.0004, down slightly from Wednesday's close at C$0.9991 to the U.S. dollar, or US$1.0009.

The currency has been unable to bridge a key technical level near its 200-day moving average at C$0.9961 to help it move higher.

"There's a lot of resistance to a sharp move," said Mark Chandler, head of Canadian fixed income and currency strategy at Royal Bank of Canada.

Chandler added that some of the pushback against a higher Canadian dollar would be in the form of profit-taking by foreign investors looking to sell their Canadian assets should the currency rise significantly.   Continued...