November 2, 2011 / 8:45 PM / in 6 years

Canadian dollar firms as markets overcome Greek fears

TORONTO (Reuters) - The Canadian dollar ended slightly stronger against its U.S. counterpart on Wednesday as global markets bounced back from Tuesday’s big drops despite continuing fears that Greece’s referendum could push the country into default.

U.S. and European stocks and the euro rose as buyers emerged after the steep selloff sparked by Greece’s decision to hold a referendum on the European debt bailout plan. But markets remained on edge as the future of the plan seemed to hinge on the views of Greek voters.

Less-dismal data on the U.S. job market and hopes of more policy easing from the U.S. Federal Reserve and the European Central Bank also supported stocks and the euro.

The Fed did not announce more monetary easing after a two-day meeting of its federal open market committee (FOMC) ended on Wednesday. But analysts said its statement and Chairman Ben Bernanke’s comments left the door open for more stimulus if the economy needs it.

“We’ve had some volatility driven off headlines about what’s going on in Europe. The FOMC also to some extent drove markets, but Bernanke comments don’t tend to move the markets around the way (ECB) comments do,” said David Bradley, director of foreign exchange trading at Scotia Capital.

The Canadian dollar ended the North American session at C$1.0136 to the U.S. dollar, or 98.66 U.S. cents, up slightly from Tuesday’s North American session close at C$1.0188 versus the greenback, or 98.15 U.S. cents.

Bradley said he expected markets to consolidate ahead of some of the risks that may arise in the next 48 hours, with “reasonable support” for dollar-Canada around C$1.01.

Markets will focus on the outcome of a European Central Bank policy meeting on Thursday and on Canadian and U.S. employment data on Friday.

Canadian government bond prices were lower across the curve. The two-year bond fell 8 Canadian cents to yield 0.966 percent, while the 10-year bond dropped 9 Canadian cents to yield 2.171 percent.

Reporting by Andrea Hopkins; editing by Peter Galloway

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