Canadian dollar recovers on U.S. data, finishes above par again

Wed Jan 5, 2011 5:03pm EST
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TORONTO (Reuters) - The Canadian dollar recovered from session lows against the greenback on Wednesday to end above parity for a third straight session, buoyed by U.S. data that showed a much better than expected gain in private sector jobs for December.

The Canadian dollar finished at C$0.9964 to the U.S. dollar, or $1.0036, up from Tuesday's close at C$0.9985 to the U.S. dollar, or $1.0015.

"We've managed to keep that level above parity for now. We'll see what Friday brings. There's a lot of intrigue and interest in both the Canadian and U.S. employment numbers. But, for the time being, people seem to be embracing risk," said Eric Lascelles, chief Canada macro strategist, at TD Securities.

"Not every risk-on currency had a banner day, but the Canadian dollar managed to eke one out."

It clawed back above par from a session low of C$1.0024 to the U.S. dollar, or 99.76 U.S. cents, following an ADP Employer Services report that showed U.S. private employers added 297,000 jobs in December, nearly triple forecasts.

"The perception is that the headwinds in the Canadian economy are not really domestic but primarily U.S.," said Firas Askari, head of foreign exchange trading at BMO Capital Markets, noting that the Canadian dollar was outperforming other major currencies.

"This is potentially a beginning of a trend of a pickup in employment growth, which leads to housing and everything else, which leads to us exporting more of our great commodities. That's the logic."

The currency moved higher throughout the session to touch a session high of C$0.9934 to the U.S. dollar, or $1.0066, as the ADP figures boded well for the official U.S. jobs report on Friday. Official monthly employment reports are also due from Canada.

As well, U.S. Federal Reserve Chairman Ben Bernanke's congressional testimony on Friday will be closely followed.   Continued...

<p>Canadian currency in the form of one dollar coins, otherwise known as loonies, are displayed in this posed photograph in Toronto, October 22, 2008. REUTERS/Mark Blinch</p>