Loonie slumps, loosens grip on parity

Thu Apr 8, 2010 8:25am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Claire Sibonney

TORONTO (Reuters) - The Canadian dollar loosened its grip on parity with the U.S. currency on Thursday, a day after nearing a 21-month high as oil prices retreated further and euro zone worries persisted.

Oil slipped for a second day toward $85 a barrel, pressured by a stronger U.S. dollar and a rise in U.S. crude stockpiles to their highest level in nearly 10 months, weighing on Canada's commodity-lined currency.

Fears about Greece's financial stability intensified, knocking European shares and U.S. stock market futures lower and driving the euro close to this year's low against the greenback.

"Canada has pulled back considerably after the party at parity," said C.J. Gavsie, managing director of foreign exchange sales at BMO Capital Markets.

"That seems to be a little bit over, but the Canada story has definitely been set aside just for the time being, and we're focusing back on what's going on with the big dollar and definitely the European implications."

Gavsie added the markets are also keeping a close eye on reports that China was close to announcing a shift in its currency policy involving a "small but immediate" revaluation of the yuan, which rose to its highest since October.

"If there is some movement on that band, then there is going to be obviously some movement in the currency markets. There will be spillover as to implications of the big dollar, euro and then commodities on the side."

The Canadian dollar touched a low of C$1.0093 to the U.S. dollar, or 99.08 U.S. cents.   Continued...