C$ strengthens with equities, decade high vs euro

Tue Jun 8, 2010 4:47pm EDT
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By Claire Sibonney

TORONTO (Reuters) - Canada's dollar strengthened against the greenback on Tuesday and reached multi-year highs versus the euro as investors moved back into risk-sensitive assets, including equities and commodities.

With sentiment in financial markets improving during the day, the Canadian dollar at one point strengthened more than one U.S. cent to C$1.0472, or 95.49 U.S. cents.

Against the euro, it hit C$1.2507, or 79.96 euro cents, its strongest level in almost a decade against the single currency.

"The Canadian dollar appears to have decoupled from the sovereign debt concerns in Europe," said Michael O'Neill, managing director at Knightsbridge Foreign Exchange, a commercial foreign exchange dealer.

"At this point in time the strong Canadian fundamentals are trumping concerns over Europe."

The move was supported by reassuring comments by Federal Reserve Chairman Ben Bernanke on Monday that the U.S. economy will likely avoid a "double-dip" recession and that European leaders are committed to ensuring the survival of the euro.

European Union finance ministers on Tuesday said they must do more to restrain spending and contain a debt crisis that threatens to spread to countries that do not use the euro such as Hungary and Britain.

But earlier, a report by Fitch Ratings that the UK faced a "formidable" fiscal challenge put any real sense of stability into question.   Continued...