Thirst for risk drives C$ higher
By Jennifer Kwan
TORONTO (Reuters) - Canada's dollar ended higher against the greenback on Tuesday, boosted by a return of risk appetite on optimism over corporate earnings and a successful Greek auction that eased worries about euro-zone debt.
The Canadian dollar touched a high of C$1.0276 to the U.S. dollar, or 97.31 U.S. cents, its highest level since June 23, as North American equity markets finished the session firmly in the black.
Investors were in the mood to buy riskier assets after Alcoa Inc, the largest U.S. aluminum producer and seen as a bellwether for the U.S. economy, reported stronger than expected results and raised its estimate for global aluminum consumption.
That was followed by Greece's successful return to capital markets with a T-bill sale, passing its first borrowing test since securing a 110 billion euro emergency funding deal in May.
"It's pretty much the return of risk appetite that took everything risky higher. We saw oil prices increasing, commodity prices increasing, equities higher," said Matthew Strauss, senior currency strategist at RBC Capital Markets.
The Canadian dollar finished at C$1.0337 to the U.S. dollar, or 96.74 U.S. cents, up from Monday's finish at C$1.0375 to the U.S. dollar, or 96.39 U.S. cents.
Increased risk appetite saw global equities advance on an upbeat earnings outlook, while oil prices rose above $77 a barrel on optimism for the economic recovery and stronger demand.
As well, domestic data showed that strong demand from Canadian businesses and consumers triggered a surge in imports in May that outpaced exports, leading to the third consecutive monthly trade deficit. Continued...