TORONTO (Reuters) - The Canadian dollar advanced against the U.S. dollar on Wednesday morning as riskier assets rallied on comments from China’s central bank chief that the country would keep investing in euro zone debt and after upbeat global economic data.
Central Bank Governor Zhou Xiaochuan said China was ready to play a bigger role in solving Europe’s debt problems and remains confident in the euro, lifting sentiment for stocks.
“It follows the overall flow that seems to continue to be marginally biased for risk appetite,” said Jack Spitz, managing director of foreign exchange at National Bank Financial.
”There was an attraction to buying up risk on the China news
but it seems to be going through a fair bit of erosion just simply because of the noise coming out of Europe.”
Weighing on the risk rally, news that euro zone finance officials were examining ways of delaying parts or even all of a second bailout for Greece, while still avoiding a disorderly default, rekindled fears about the region’s debt crisis.
On the upside, however, better-than-expected data from Germany and France helped confidence, while a gauge of manufacturing in New York State picked up in February to its highest level in more than 1-1/2 years.
Canada’s currency was also supported by oil prices. U.S. crude climbed above $102 a barrel after Iranian state TV said Iran stopped oil exports to six European states in retaliation for European Union sanctions imposed on the Islamic state, adding to supply concerns.
At 9:18 a.m., the Canadian currency stood at C$0.9958 versus the U.S. dollar, or $1.0042, up slightly from Tuesday’s North American session close at C$0.9995 versus the U.S. dollar, or $1.0005.
Spitz said the Canadian dollar could easily trade anywhere between C$0.9930, which has shown some short-term resistance, and the 20-day moving average around C$1.0010.
“The breakout will really be path dependent upon what goes on in Europe as Greece stumbles towards the bailout,” he added.
Canadian bond prices were little changed across the curve. The two-year bond lost half a Canadian cent to yield 1.067 percent. The 10-year bond gained 5 Canadian cents to yield 2.015 percent.
Reporting by Claire Sibonney