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* Closes at C$1.0283, or $97.25 U.S. cents
* Uncertainty over Europe drives market sentiment
* Bond prices fall across curve (Updates to close, adds analyst's comment)
By Andrea Hopkins
TORONTO, Sept 26 (Reuters) - The Canadian dollar ended little changed against the U.S. dollar on Monday after a seesaw session as markets swung between hope and gloom over progress in talks to bail out debt-laden European nations.
Equities rallied as euro-zone optimism gained force, with the Dow Jones industrial average closing more than 2.5 percent higher.
But silver fell as much as 16 percent and gold slid nearly 4 percent, hit by momentum selling and by heavy selling by commodity hedge funds seeking to raise cash to meet losses elsewhere. [ID:nL5E7KQ144]
In a sign of progress, European officials are working on ways to magnify the financial firepower of the euro zone's rescue fund to fight the sovereign debt crisis more effectively, a senior European Central Bank policymaker said. [ID:nLDE78P01H]
Markets have whipsawed for months over fears of European debt contagion and hopes that officials will finally contain the crisis.
"It's been one of those days of to and fro. We had bearishness, then sentiment improved, then we had bearishness, then sentiment improved again," said David Watt, senior currency strategist at Royal Bank of Canada.
"We don't really have anything concrete for markets to trade on these days so they tend to go whichever way the wind happens to be blowing, and whatever rumor happens to be grabbing the market's attention drives general market sentiment."
The Canadian dollar CAD=D4 ended the North American session at C$1.0283 to the U.S. dollar, or $97.25 U.S. cents, little changed from Friday's North American session close of C$1.0294 to the U.S. dollar, or 97.14 U.S. cents.
Earlier in the day, it fell as low as $1.0386, or 96.28 U.S. cents, its lowest level since Sept. 9, 2010.
Last week, traumatized investors pushed the Canadian dollar 5 percent lower against the safe-haven greenback.
Adam Cole, global head of FX strategy at RBC Capital Markets in London, said there was significant support for the Canadian dollar around last September's trough near C$1.0670. Resistance is back toward parity, where the currency has held for most of the year, though getting back there will be a struggle.
"It's difficult to see a catalyst ... there are still so many concerns over the banking system in Europe and the direction of euro zone policy and failure of the various parties involved to reach any kind of binding agreement," Cole said.
Watt said there is little on the horizon to give the Canadian dollar definite direction, so the latest headlines about Europe or U.S. growth may continue to set the tone.
"Unfortunately that might be the way it remains until we get some clarity as to what is going to happen, specifically in the euro zone and elsewhere as well," Watt said.
Bond prices were lower across the curve. The two-year Canadian government bond CA2YT=RR was down 14.5 Canadian cents to yield 0.937 percent, while the 10-year bond CA10YT=RR shed 67 Canadian cents to yield 2.147 percent. (Additional reporting by Claire Sibonney; editing by Peter Galloway)