Loonie snaps 3-day slide on upbeat data, Greece hopes

Wed Mar 7, 2012 4:57pm EST
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By Claire Sibonney

TORONTO (Reuters) - The Canadian dollar ended slightly stronger against the greenback on Wednesday, halting a three-day slide, after promising U.S. jobs data and better prospects for Greece's debt deal lifted sentiment.

Major banks and pension funds said they will take part in Greece's debt swap offer to private creditors, raising the likelihood that the deal will go through by Thursday and a bailout package worth 130 billion euros will be secured in a bid to avert a chaotic default.

Investor confidence also picked up after a report from payroll processor ADP showed slightly stronger than expected growth in U.S. private-sector jobs in February, suggesting the world's biggest economy is gaining traction.

"What you had this week was over-elevated concerns about Greece. Now the market is taking another look at the U.S. economy and looking at the long-term strength that we're going to see in the U.S. and Canadian economies, and that's helped to boost sentiment," said Adam Button, a currency analyst at ForexLive in Montreal.

"We have a jobs picture in the U.S. that looks like it's heading on an upward trajectory and the market is optimistic that will be confirmed on Friday."

The Canadian dollar ended the North American session at C$0.9982 versus the U.S. dollar, or $1.0018, up from Tuesday's close on the other side of parity at C$1.0006 against the U.S. dollar, or 99.94 U.S. cents.

Markets also focused on a Wall Street Journal article on Wednesday that revived hopes the U.S. Federal Reserve would embark on a third round of quantitative easing.

One option that the Fed is considering is the purchase of more bonds in an effort to hold down borrowing costs, and lend them out short-term in a bid to hold back inflation, the newspaper reported.   Continued...