Loonie eases in spite of Greece aid package

Fri Mar 26, 2010 5:33pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

TORONTO (Reuters) - Canada's dollar eased against the U.S. currency on Friday, unable to join in the euro's gains after policymakers agreed on an aid package for debt-ridden Greece.

Euro zone leaders made the agreement on Thursday after weeks of wrangling to try to restore confidence in their common currency.

The Canadian dollar ended at C$1.0267 to the U.S. dollar, or 97.40 U.S. cents, down from Thursday's finish at C$1.0248 to the U.S. dollar, or 97.58 U.S. cents.

"It really didn't benefit from a fairly marked snapback in the euro today," said Doug Porter, deputy chief economist at BMO Capital Markets.

One analyst said the euro's rally may have prompted some traders to close out short positions they had on the euro against the Canadian dollar.

The euro gained broadly on the Greece accord, and got an extra lift when Bank of Greece Governor George Provopoulos told reporters the country is not likely to make use of the EU-IMF financial aid facility.

"The way I've been saying since the start of this year, is the Aussie and (Canadian dollar) have been the top twosome and sterling and euro have been the gruesome twosome. Now we're getting the euro coming back a little bit so it's not surprising to see Aussie and Cad losing a bit of the froth," said David Watt, senior currency strategist at RBC Capital Markets.

While economic fundamentals still generally favor the Canadian dollar, it seems external forces have stalled the currency's run earlier this month to test parity with the greenback.

"The fever seems to have broke about a week ago. The currency is clearly cooling its jets for the time being. It looks like it's going to be a little while before it takes another run at parity," said Porter.   Continued...