RTTN:Canadian Dollar Advances As Crude Prices Rally On Cyprus Deal
The Canadian dollar rallied ahead of the North American session on Monday as the price of crude oil rose after Cyprus clinched an alternative deal to avert a collapse of its banking system.
Light Sweet Crude Oil (WTI) futures for May delivery, gained $0.52 to $94.23 a barrel. Last week, oil settled marginally higher as demand growth concern eased after upbeat manufacturing data out of China and an EIA report revealed crude stockpiles declined last week.
Euro-zone's finance ministers reached a last-minute agreement with Cyprus on a 10 billion euro bailout deal, averting an imminent collapse of the country's financial sector.
The plan envisages splitting Laiki or Cyprus Popular Bank immediately into a good bank and bad bank, with the good bank to be folded into the Bank of Cyprus.
Holders of deposits above 100,000 euros in Laiki are forced to take losses, while the bank's deposits of less than 100,000 euros will be transferred to the Bank of Cyprus.
Bank of Cyprus will be recapitalized through a deposit or equity conversion of uninsured deposits with full contribution of equity shareholders and bond holders.
The conversion will be such that a capital ratio of 9 percent is secured by the end of the program. The bailout money of EUR 10 billion will not be used to recapitalize Laiki and Bank of Cyprus, the Eurogroup said in a statement.
The European Central Bank will provide liquidity to Bank of Cyprus, but the uninsured deposits will remain frozen until recapitalization has been effected.
All insured depositors and deposits up to EUR 100,000 in all banks will be protected in accordance with the relevant EU legislation.
Cyprus also committed to step up reform efforts in the areas of fiscal consolidation, structural reforms and privatization.
The Canadian dollar climbed to a 4-day high of 93.17 against the yen around 8:15 am ET, up almost 1.5 percent from Friday's fresh 2-week low of 91.83.
Failure of piercing last week's 91.80 support could help the pair challenge the 93.65/80 resistance level.
The Canadian currency rose back above the 1.02 mark against the greenback for the first time in 10-days, rising as high as 1.0190 around 7:00 am ET.
Immediate resistance for the loonie is seen around the 1.0180 area, which is a minor near-term support for the USD/CAD pair.
The Canadian dollar also edged higher against the euro, rising as high as 1.3220 around 8:20 am ET, up almost 1 percent from Asian session's 10-day low of 1.3348. If the loonie extends advance, 1.3180 is seen as the next likely resistance level.
