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TORONTO (Reuters) - The Canadian dollar closed slightly firmer on Monday after a volatile session in which it took much of its direction from equity markets that clawed out modest gains before closing weaker.
Toronto's main stock index ended lower as falling energy, financial and tech shares weighed heavily on the market, reversing earlier gains built on a rally in gold stocks.
"A lot of it is just the equity market movements," said Sacha Tihanyi, currency strategist at Scotia Capital.
"With the lack of data today, it's kind of been that story and the story with the U.S. dollar."
The Canadian dollar closed the North American session at C$1.0602 to the U.S. dollar, or 94.32 U.S. cents, slightly firmer than Friday's finish at C$1.0607 to the U.S. dollar, or 94.28 U.S. cents.
Earlier it hit a session high of C$1.0516, or 95.09 U.S. cents, buoyed by equity market gains which helped it outperform against other major currencies, as well as some solid manufacturing data out of Germany.
Overnight the Canadian dollar had weakened to C$1.0680 to the U.S. dollar, or 93.63 U.S. cents, its weakest since May 27.
In a note to clients, George Davis, chief technical analyst at RBC Capital markets, said he saw support levels at C$1.0530 and C$1.0414, with resistance levels between C$1.0672 and C$1.0743.
Verus the euro, the Canadian dollar touched a session high of C$1.2569, or 79.56 euro cents. This was just below levels seen on Friday, when the Canadian dollar hit its strongest level against the euro since 2001.
The Canadian currency and euro both fell hard on Friday on a disappointing U.S. jobs report and on comments out of Hungary that its finances were worse than previously thought, ratcheting up concerns about the European sovereign debt situation.
Looking ahead, there are no major Canadian data releases this week. In the United States, market players will be watching the U.S. retail sales numbers on Friday for more insight into the health of the world's No. 1 economy.
Otherwise, the events in Europe are expected to be a dominant driver of currency moves.
Canadian Finance Minister Jim Flaherty said Canada is concerned about the "continuing economic uncertainty" in Europe, adding some countries there are under pressure from the markets.
Canadian bond prices were mostly weaker, mirroring U.S. Treasuries, which kept yields near their lowest in almost two weeks as struggling stocks and worries over Europe's fiscal crisis offset selling ahead of this week's auctions.
The two-year Canadian government bond was down 2 Canadian cents to yield 1.629 percent, while the 10-year bond fell 4 Canadian cents to yield 3.295 percent.
Canadian bonds lagged Treasuries across the curve, with the Canadian 10-year yield 14.5 basis points about its U.S. counterpart, compared with 8.20 points above on Friday.
In new issues, Alberta Capital Finance priced C$600 million of five-year notes, according to a term sheet seen by Reuters.
Editing by Jeffrey Hodgson