TORONTO (Reuters) - Canada’s dollar climbed against the U.S. dollar on Monday morning, helped by investor relief after Greek politicians passed tough austerity measures crucial to securing a second bailout and avoiding a chaotic default.
The risk-on trade tracked a broader move by commodities, equities and the euro but gains looked fragile with several issues still to be resolved before the shadow of a messy debt default is lifted.
“It’s been a really consistent story since the start of the year. We’ve had very few risk-off days ... given what’s happening in other markets it’s primarily just the risk-on trade itself,” said Mark Chandler, head of fixed income and currency strategy at RBC Capital Markets.
Greece must still detail how a further 325 million euros of spending cuts will be reached, and give binding assurances the full plan will be implemented before euro zone finance ministers meet on Wednesday.
At 9:15 a.m. (1415 GMT), the Canadian currency stood at C$0.9989 versus the U.S. dollar, or $1.0011 U.S., up from Friday’s North American session close of C$1.0028 to the U.S. dollar, or 99.72 U.S. cents, which marked its biggest weekly drop this year.
RBC Capital Markets expects today’s range to fall on either side of parity between C$0.9950-C$1.0005.
“Really, in terms of what’s driving the Canadian dollar, there’s not a heck of a lot domestically behind it.”
Canadian bond prices retreated alongside U.S. Treasuries. Canada’s two-year bond fell 4 Canadian cents to yield 1.090 percent. The 10-year bond drifted down 17 Canadian cents to yield 2.072 percent.
Reporting by Claire Sibonney; Editing by James Dalgleish