TORONTO (Reuters) - The Canadian dollar ended slightly stronger against the greenback on Wednesday, halting a three-day slide, after promising U.S. jobs data and better prospects for Greece’s debt deal lifted sentiment.
Major banks and pension funds said they will take part in Greece’s debt swap offer to private creditors, raising the likelihood that the deal will go through by Thursday and a bailout package worth 130 billion euros will be secured in a bid to avert a chaotic default.
Investor confidence also picked up after a report from payroll processor ADP showed slightly stronger than expected growth in U.S. private-sector jobs in February, suggesting the world’s biggest economy is gaining traction.
“What you had this week was over-elevated concerns about Greece. Now the market is taking another look at the U.S. economy and looking at the long-term strength that we’re going to see in the U.S. and Canadian economies, and that’s helped to boost sentiment,” said Adam Button, a currency analyst at ForexLive in Montreal.
“We have a jobs picture in the U.S. that looks like it’s heading on an upward trajectory and the market is optimistic that will be confirmed on Friday.”
The Canadian dollar ended the North American session at C$0.9982 versus the U.S. dollar, or $1.0018, up from Tuesday’s close on the other side of parity at C$1.0006 against the U.S. dollar, or 99.94 U.S. cents.
Markets also focused on a Wall Street Journal article on Wednesday that revived hopes the U.S. Federal Reserve would embark on a third round of quantitative easing.
One option that the Fed is considering is the purchase of more bonds in an effort to hold down borrowing costs, and lend them out short-term in a bid to hold back inflation, the newspaper reported.
Apart from Greece and the U.S. and Canadian jobs data, currency traders were looking ahead to Chinese inflation numbers on Friday and the Bank of Canada’s interest rate decision on Thursday.
The Canadian dollar has lost nearly a cent against the greenback this month, but global forecasters have raised their targets for the currency from a month ago and expect it to trade near parity with the U.S. dollar for much of 2012. <CAD/POLL>.
“Parity right now is a very poetic spot for the Canadian dollar to be, because fundamentally we have so many risks that could be watershed risks in the remainder of the week,” added Button.
He said the one big level to watch for in the domestic currency is support at C$1.0050.
Canadian bond prices retreated across the curve as risk appetite returned.
The two-year bond fell 9 Canadian cents to yield 1.124, while the 10-year bond dropped 28 Canadian cents to yield 1.967 percent.
Editing by Rob Wilson