TORONTO (Reuters) - Canada’s dollar edged slightly higher against its U.S. counterpart on Tuesday while global markets were little changed as investors were hesitant to make major bets ahead of a European summit later this week.
The move tracked global equities where apprehension over the outcome of this week’s crucial summit left the euro near a two-week low, but European shares managed a slight uptick after three days of losses. <MKTS/GLOB>
“I would characterize the market in general as subdued and mostly sideways. Fairly light liquidity-wise ahead of the event risk this week, which is clearly the EU summit,” said Jack Spitz, managing director of foreign exchange at National Bank Financial.
The two-day summit in Brussels on Thursday and Friday will be the 20th time European Union leaders have met on resolving a crisis that has spread across the euro zone since it began in Greece in early 2010.
At 8:08 a.m., the Canadian currency was at C$1.0275 to the greenback, or 97.32 U.S. cents, up from Canadian currency Monday’s finish at C$1.0292 to the greenback, or 97.16 U.S. cents.
A spike in Spain’s short-term borrowing costs capped gains. Costs nearly tripled at auction on Tuesday, underlining the country’s precarious finances as it struggles against recession and juggles with a debt crisis among its newly downgraded banks.
The formal request from Spain for European funds and Moody’s mass downgrade of 28 of its banks, as well as news that Cyprus had become the fifth euro zone nation to request a bailout, kept the appetite for riskier assets relatively low. <MKTS/GLOB>
Spitz said investors will await economic data on Tuesday including the S&P Case/Shiller Home Price Index for April and consumer confidence data for further direction, but the real market focus will be the outcome of the EU summit later in the week.
Heading into that event, Spitz said he expects the currency to trade in a range of C$1.02 to C$1.03 versus the greenback.
Canadian bonds were slightly lower with the two-year Canadian government bond down 1 Canadian cents to yield 1.0 percent, while the benchmark 10-year bond was lower by 8 Canadian cents to yield 1.737 percent. The 30-year bond yielded 2.307.
Editing by Theodore d'Afflisio