Canadian dollar lifted by German data, oil prices

Thu Feb 23, 2012 8:25am EST
 

By Claire Sibonney

TORONTO (Reuters) - The Canadian dollar strengthened back through parity against the U.S. dollar on Thursday as better-than-expected German data eased concerns about a bleak euro zone economic outlook and a rally in oil prices fueled commodity currencies.

However, markets remained wary about the negative impact of higher oil prices and potential problems implementing Greece's bailout. Broader concern over the economy was also borne out by European Commission forecasts showing the euro zone would contract this year.

"The European developments themselves speak to a positive and a negative reaction in the currency space. We've seen a better than expected German Ifo, which gave the euro a bid to a new calendar high and some of that optimism pulled back on the downsized forecasts coming from the EU," said Jack Spitz, managing director of foreign exchange at National Bank Financial.

"The fundamentals continue to speak to an erratic global environment."

At 8:04 a.m., the Canadian dollar stood at C$0.9972 against its U.S. counterpart, or $1.0028, up from Wednesday's North American session close at C$1.0004 versus the U.S. dollar, or 99.96 U.S. cents.

Spitz said intraday support and resistance for the U.S. dollar against Canada's should be seen at C$0.9940 and C$1.0020 with the 200-day moving average at C$0.9980 the pivot point for relative optimism or pessimism from a closing perspective.

Earlier, strong results from the key Ifo survey of German business eased financial markets' concerns over the European economy, sending the euro to a 10-week high and dragging shares into positive territory.

Meanwhile, U.S. crude futures advanced above $106 a barrel, after settling at a nine-month high in the previous session, as heightened tension between Iran and the West and a weaker U.S. dollar offset concerns that a slowdown in the global economy would curb demand.   Continued...