NS: Canadian dollar turns lower in wake of deal to prop up Spanish banking sector
TORONTO - The Canadian dollar turned lower late morning Monday as early relief that Spain was getting a bailout for its banking sector began to fade.
The commodity-sensitive loonie lost 0.22 of a cent to 97.15 cents US as early advances in oil prices weakened and the greenback strengthened.
Eurozone finance ministers said Saturday they would make up to €100 billion in loans available to the Spanish government to prop up banks, which are staggering under the weight of billions of euros of toxic assets from a collapsed real estate market.
Spain has yet to say how much of this money it will tap. It had been reluctant to seek help from the EU.
While traders were pleased to see some progress in dealing with Spain's banking sector, they realized that the bailout "does little to resolve the larger (European Monetary Union) crisis or contain contagion," observed Scotia Capital chief currency strategist Camilla Sutton.
"A sustained risk rally will need a clear and detailed long-term path for Europe, a fiscal plan for the U.S. and evidence that global growth is not being material dragged lower by the European crisis."
Prices for oil and metals initially advanced but by late morning the July crude contract on the New York Mercantile Exchange had lost 68 cents to US$83.42 a barrel.
July copper was up five cents to US$3.34 a pound while August bullion in New York declined $4 to US$1,587.40 an ounce.
Investors also turned their attention to Greece, where voters head to the polls this coming weekend in an election likely to determine whether the debt-mired country will stick with the euro.
If Greece were to leave the common currency, that would raise questions about whether other countries might follow suit.
