TORONTO (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Monday as Spain’s rising debt yields sparked concern about the euro zone economy, but hopes for a rosier outlook from the Bank of Canada boosted Canada’s currency above other majors.
Sentiment was cautious across financial markets as Spanish 10-year government bond yields rose above 6 percent for the first time this year and the cost of insuring its debt hit a record high. <MKTS/GLOB> <FRX/>
The euro fell to its lowest in two months, as selling by some Asian investors picked up early in the European session.
“The Canadian dollar is holding in relatively well independently,” said Jeremy Stretch, head of foreign exchange strategy for CIBC World Markets in London.
“There’s a case to be made that the underlying fundamentals remain pretty robust and so on a relative basis Canada looks good against the euro, partly because of the euro woes based around Spain.”
At 8:45 a.m. EDT (1245 GMT), the Canadian dollar was at C$0.9987 versus the U.S. dollar, or $1.0013, little changed from Friday’s North American close at C$0.9984 versus the U.S. dollar, or $1.0016. It touched an overnight session high of C$0.9981 against the greenback.
News over the weekend that China had doubled the yuan’s daily trading band against the U.S. dollar to 1 percent had limited impact on major currencies.
Oil and metals prices were suffering from the worries about Spain, but were also hit by the signs of slowing demand from China and fears U.S. consumer demand was being hurt by high gasoline prices. <O/R> <MET/L>
The Canadian currency shrugged off the broader dip in commodities as traders focused on Tuesday’s policy announcement from the Bank of Canada.
“It’s a case where markets are mindful of the Bank of Canada and what they may say tomorrow, which should be reasonably supportive for the currency,” said Stretch, who saw the Canadian dollar making further gains against the euro and the Australian dollar.
Editing by Jeffrey Hodgson