3 Min Read
* C$ slightly higher at C$0.9929 vs US$, or $1.0072 * Hits near 3-week low after Europe elections rattle investors * Bond prices lower across the curve By Jennifer Kwan TORONTO, May 7 (Reuters) - The Canadian dollar recovered on Monday after stumbling to its lowest level in almost three weeks against its U.S. counterpart on worries that anti-austerity election results in Europe could thwart the region's drive to contain its debt crisis. At around 2:30 p.m. (1830 GMT), the Canadian dollar was at C$0.9929 versus the U.S. dollar, or $1.0072, slightly higher than Friday's finish at C$0.9955 versus the U.S. dollar, or $1.0045. The Canadian currency managed to eke out the small gain and recovered after getting wound up in an overnight market rout after weekend elections in Greece and France saw incumbents defeated. The results of the weekend elections in the two European countries heightened the uncertainty of the path ahead for the euro-zone debt crisis. But by midday on Monday world markets took political upheaval in Europe largely in stride, with the euro recovering from sharp losses and local equity markets up. "I think this market was pretty well positioned for the results that came out. I think it's a little bit of the sell-the-rumor, buy-the-fact scenario unfold," said Matt Perrier, director of foreign exchange sales at BMO Capital Markets. Earlier the Canadian dollar touched a low of C$0.9988, or $1.0012, its weakest level against the greenback since April 17. Greece's vote, combined with the victory of Socialist Francois Hollande over incumbent Nicolas Sarkozy in a French presidential election, will raise pressure on Europe's paymaster, Germany, to pursue a more growth-oriented approach to the crisis. "In France it seemed to be largely expected ... people were maybe a little more surprised at the more tenuous coalition that could exist in Greece," said David Tulk, chief Canada macro strategist at TD Securities. "This is consistent with a theme that as good as we think that things are in Europe, we still are nowhere near out of the woods, so prepare for more volatility in the interim." The signs of a renewed political crisis in Europe came just as Friday's downbeat U.S. nonfarm payrolls report dealt a blow to hopes of recovery for the world's largest economy. In the short term, BMO's Perrier saw the Canadian currency trading in a tight range of C$0.9900 to C$0.9938 against the greenback. Canadian bond prices were most lower across the curve, with Canada's 2-year bond down 4 Canadian cents to yield 1.271 percent, while the benchmark 10-year bond sank 10 Canadian cents to yield 2.030 percent.