BLBG:Canadian Dollar Rises as ECB Buys Cyprus Time to Renegotiate
The Canadian dollar rose for the first time in three days against its U.S. peer on speculation the European Central Bank’s pledge to provide liquidity to Cyprus will buy it time to renegotiate a financial bailout.
The currency rose against the majority of its most traded peers before a report tomorrow forecast to show Canada’s retail sales increased in January after contracting the prior month. The U.S. Federal Reserve is projected to keep its benchmark interest rate at zero to 0.25 percent in its policy decision today, according to all 43 economists in a Bloomberg survey.
“The risk seems to be for a stronger Canadian dollar -- the Fed and Canadian data potentially being beneficial to the Canadian dollar, and headline risks in Europe have more potential to weigh on the Canadian dollar,” Greg T. Moore, currency strategist at Toronto-Dominion Bank (TD), said by phone from Toronto. “There is still room for a bit of a pullback in dollar/CAD, so CAD strengthening, as long as headline risks remain subdued.”
The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, rose 0.3 percent to C$1.0240 per U.S. dollar at 8:16 a.m. in Toronto. One loonie buys 97.66 U.S. cents.
Canada’s dollar rose, along with fellow commodity currencies such as the Australian dollar and the Norwegian Krone, as the ECB yesterday reaffirmed its commitment to offer funding to Cyprus “within the existing rules,” after Cypriot lawmakers rejected a levy on bank deposits.
Until the issue in Cyprus is resolved, Moore said he sees the Canadian dollar trading between C$1.02 and C$1.0330 per U.S. dollar.
To contact the reporter on this story: Ari Altstedter in Toronto at aaltstedter@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
