BLBG: Canada Dollar Reaches 11-Month High Versus Euro After Italy’s Bond Sales
The Canadian dollar rose to the highest level since January against the euro on speculation the European Central Bank will need to increase cash injections after Italy failed to sell the maximum amount at debt auctions.
The currency, nicknamed the loonie, rose against a majority of its most-traded peers and was little changed against its U.S. counterpart on optimism the American economy is gaining momentum, spurring demand for currencies linked to growth. U.S. stock-index futures advanced.
“Euro-zone issues still being unresolved have driven the ECB to start lowering rates,” said Steve Butler, director of foreign-exchange trading in Toronto at Bank of Nova Scotia’s Scotia Capital unit. “Better data out of the U.S. is starting to bring some optimism back into the U.S. economy. That is certainly good news for us here in Canada.”
The loonie gained 0.6 percent to C$1.3180 against the euro at 7:39 a.m. Toronto time, after touching C$1.3175, the most since Jan. 18. It was little changed at C$1.0235 per U.S. dollar. One Canadian dollar buys 97.70 U.S. cents.
Futures on the Standard & Poor’s 500 Index increased 0.3 percent. Futures on crude oil, Canada’s biggest export were flat at $99.62 a barrel in New York.
The loonie rose against the 17-nation currency, which dropped to the weakest since January versus the dollar as Italy sold 7.02 billion euros ($9.06 billion) of debt due from 2014 to 2022, less than its original target of up to 8.5 billion euros. The ECB said yesterday its balance sheet climbed to a record after it increased lending to banks in the region last week. The yen strengthened against most of its major counterparts as speculation Europe’s debt crisis will worsen spurred demand for safer assets.
Scotia Capital predicted the Canadian dollar will trade at C$1.02 versus the greenback by the end of the first quarter, and trade at C$1.3150 against the euro.
To contact the reporter on this story: Chris Fournier in Halifax, Nova Scotia, at cfournier3@bloomberg.net
To contact the editor responsible for this story: Robert Burgess at bburgess@bloomberg.net
