3 Min Read
* C$ rises to C$0.9755 vs US$ or $1.0251
* Greenback weakens after China comments on U.S. assets
* Bonds fall as firm European data saps safe-haven bid
By John McCrank
TORONTO, June 7 (Reuters) - Canada's dollar rose against a broadly weaker U.S. dollar on Tuesday after bearish comments from China on U.S. assets and improved market sentiment in Europe helped put a floor under commodity prices.
The greenback fell to a one-month low against a basket of currencies on Tuesday after a Chinese official warned against "excessive" U.S. dollar holdings because Washington could take steps to further weaken the currency. [ID:nLDE7560QW]
"We've seen a rally in the euro since the China comments came out last night," said David Bradley, director of foreign exchange trading at Scotia Capital. "That's caused the Canadian dollar to strengthen as well on general U.S. dollar weakness."
The Canadian dollar [CAD=D4] ended the North American session at C$0.9755 to the U.S. dollar, or $1.0251, up from a close of C$0.9808, or $1.0196, on Monday. The currency spent the day in a range between C$0.9809 and C$0.9732. The 100-day moving average is C$0.9747.
U.S. Federal Reserve Chairman Ben Bernanke acknowledged on Tuesday a slowdown in the U.S. economy but offered no hints that the central bank is considering any further monetary stimulus to support growth. [ID:nW1E7GV010]
Improved investor confidence also helped boost the Canadian dollar, said David Tulk, chief Canada macro strategist at TD Securities. "There was some pretty encouraging data out of Europe."
Figures showed that euro zone retail sales were nearly three times stronger than expected in April. Also, German manufacturing data was up 2.8 percent, helped by an above average number of orders, indicating the economy should expand at a healthy pace. [ID:nLDE7560WH] [ID:nLDE7560XG]
"That's generally putting markets in a bit more of a positive mood and showing up as a weaker dollar that has helped the Canadian dollar, along with other currencies," Tulk said.
The weaker greenback gave a boost to commodities traded in U.S. dollars. The price of gold, which is up 5 percent over the past three weeks, firmed to $1,550 an ounce before falling back to around $1,544, while U.S. oil prices settled up 8 cents, above $99 a barrel.
Canada is a major exporter of commodities, and swings in commodity prices often influence its currency. [ID:nLDE68E0P8]
Bond prices started heading lower early in the day when the European data came out, lessening the appeal of safe-haven government debt, said Sal Guatieri, senior economist at BMO Capital Markets.
Canada's two-year bond [CA2YT=RR] was down 3 Canadian cents to yield 1.447 percent, while the 10-year bond [CA10YT=RR] was down 25 Canadian cents to yield 3.034 percent. (Additional reporting by Solarina Ho; editing by Peter Galloway)