4 Min Read
* C$ at C$1.0137 vs US$, or 98.65 U.S. cents
* Overnight strength ends after German finmin comments
* Consolidation seen after big moves last week
* Bond prices rise
By Andrea Hopkins
TORONTO, Oct 17 (Reuters) - The Canadian dollar was little changed against its U.S. counterpart in early trade on Monday despite overnight strength as hopes for a resolution to the euro zone debt crisis were tempered ahead of a European Union summit.
The Canadian currency extended last week's 2.7 percent gain in morning trade in Europe, but fell back alongside the euro after comments from German Finance Minister Schaeuble dampened hopes for a solution to the region's debt crisis at this week's summit.
The finance minister said the summit would not yield a definitive solution to Europe's debt crisis. For details, see [ID:nL5E7LH13T]
"The comments by Schaeuble out of Germany caused the euro to turn quickly lower ... so dollar-Canada is trading close to the highs since our close on Friday," said David Bradley, director of foreign exchange trading at Scotia Capital.
"After the big move last week I think we're going to see a bit of consolidation for most of the currencies," he said. "Dollar-Canada is probably going to consolidate above parity but probably we'll stay below C$1.0225 type thing."
At 9:03 a.m., the Canadian dollar CAD=D3 stood at C$1.0137 against the U.S. dollar, or 98.65 U.S. cents, down slightly from Friday's close of C$1.0105 to the U.S. dollar, or 98.96 U.S. cents. The currency gained 2.7 percent last week as global markets turned bullish.
World stocks held near a 1-1/2 month high as expectations for solid third-quarter earnings and hopes for a resolution to the euro zone debt crisis supported risky assets, but gains were limited on caution ahead of the EU summit. [MKTS/GLOB]
The euro fell back and German government bonds bounced higher after Schaeuble's comments.
"I cannot help but think most of the good news is already priced into current market levels," John Curran, senior vice president at CanadianForex, a commercial foreign exchange dealing firm, said in a morning research note.
"EU leaders have given themselves one week to come up with a sustainable plan to avoid a Greek default and contagion to other nations, but the reality of any agreement is that the process will take years to implement and achieve."
Curran sees short-term resistance at C$1.0145, C$1.0185 and C$1.0220.
No major economic data is due out in Canada until the consumer price index on Friday.
Wall Street was set for a slightly lower open after U.S. stocks jumped on Friday following stronger-than-expected earnings from Google Inc (GOOG.O). Corporate earnings kicked into high gear on Monday with results from Citigroup Inc (C.N) and Wells Fargo & Co. (WFC.N) [.N]
Canadian bond prices were higher across the curve. The two-year Canadian government bond CA2YT=RR rose 10 Canadian cents to yield 1.047 percent, while the 10-year bond CA10YT=RR climbed 50 Canadian cents to yield 2.347 percent. (Reporting by Andrea Hopkins; editing by Jeffrey Benkoe)