Dollar weakens to near U.S. dollar parity; eyes oil, Europe

Fri Feb 24, 2012 4:21pm EST
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By Andrea Hopkins

TORONTO (Reuters) - The Canadian dollar ended slightly weaker near parity with the U.S. dollar on Friday as a quiet day on the economic front and market focus on the implementation of Greece's rescue deal kept the currency mostly on the sidelines.

While oil prices rose above $125 a barrel, on track for a fifth straight weekly gain, the Canadian dollar ended the day and the week little changed, overlooked as traders watched developments in the euro zone and Iran for direction.

"There is very little going on, so the currency is following the general tone on risk, and a little bit on the sidelines for the time being," said David Tulk, chief Canada macro strategist at TD Securities.

Oil prices rose again as the United Nation's nuclear watchdog said Iran has sharply stepped up work on uranium enrichment. The sharp run-up in oil prices has increased worries that slower consumer demand will stymie global growth, particularly as the euro zone remains mired in a debt crisis and appears headed for recession. <MKTS/GLOB>

Global stocks were little changed as rising energy costs supported the safe-haven appeal of U.S. government debt, and U.S. Treasuries were on track for their best weekly performance in four weeks.

While strong oil prices can support the resource-linked Canadian dollar, concern about their impact on U.S. and global growth weighed on risk sentiment.

The Canadian dollar closed at C$0.9997 to the U.S. dollar, or $1.0003, off slightly from Thursday's North American session close at C$0.9976 against its U.S. counterpart, or $1.0024.

"It has underperformed somewhat today largely driven by a lack of news one way or another out of economic data in the U.S. or Canada, and so instead we're focused on events in Europe, and looking forward to the G20 meeting over the weekend," Tulk said.   Continued...