TORONTO (Reuters) - The Canadian dollar firmed against the greenback on Thursday as stronger-than-expected Chinese exports boosted growth-linked currencies, while encouraging remarks by the European Central Bank added to broad pressure against the U.S. dollar.
After keeping interest rates on hold, ECB President Mario Draghi said at a news conference that the euro zone economy will recover later in 2013 and there are already some signs of stabilization.
“The ECB press conference certainly has provided a little bit of a bid to the euro overall and is keeping the U.S. dollar a little bit on the defensive,” said Jeremy Stretch, head of currency strategy at CIBC World Markets in London.
“(It’s) washed away some of the obvious and immediate concerns about a bias toward rate cuts in Europe.”
Stretch noted that the Canadian dollar was taking more of its cues from the international backdrop, despite disappointing domestic indicators.
Data on Thursday showed the value of building permits issued in Canada during November tumbled to the lowest level since January 2012 due mainly to a slowdown in housing and non-housing construction in the most populous province, Ontario.
On the upside for Canada’s commodity-driven currency, however, China surprised most observers by reporting its exports had rebounded sharply in December to hit a seven-month high, with imports growing at double the expected rate. <ID:L5N0RM09N>
At 9:27 a.m. (1427 GMT), the Canadian dollar was trading at C$0.9862 versus the greenback, or $1.0140, compared with C$0.9877, or $1.0125 at Wednesday’s close.
Stretch noted some near-term resistance for the Canadian dollar around C$0.9840. Overall, the Canadian dollar was expected to remain strong despite the fact that January has been negative for the currency in seven of the last 10 years.
Investors will be paying close attention to Canadian trade data for November on Friday and a speech later on Thursday by Tiff Macklem, a senior Bank of Canada official widely tipped to replace the departing Governor Mark Carney.
Canadian bond prices eased across the curve, tracking U.S. Treasuries lower in amid the rally in riskier assets. The two-year bond was off 6 Canadian cents to yield 1.196 percent, while the benchmark 10-year bond was down 44 Canadian cents to yield 1.955 percent.
Reporting by Claire Sibonney; Editing by Nick Zieminski