TORONTO: The Canadian dollar strengthened to a six-week high against its US counterpart on Thursday, joining a rally in the euro against the greenback following supportive comments from the European Central Bank.
The Canadian currency, which often trades on global growth prospects, erased early losses to trade stronger after ECB President Mario Draghi said the bank stood ready to act if growth continues to languish.
"As euro strengthened, CAD strengthened, suggesting it was very much about what was transpiring globally, particularly in Japan as well as the ECB," said Camilla Sutton, chief currency strategist at Scotiabank.
"It highlights that relative central bank policies are very important for currencies."
The Bank of Japan had earlier unleashed the world's most intense burst of monetary stimulus, promising to inject about $1.4 trillion into the economy in less than two years, a radical gamble that sent the yen reeling.
The Canadian currency climbed as high as C$1.0103 to the US dollar on Thursday, or 98.98 US cents, its strongest showing since Feb. 19.
The Canadian dollar ended the North American session at C$1.0123 to the US dollar, or 98.78 US cents, up from Wednesday's North American session close at C$1.0145 to the greenback, or 98.57 US cents.
"It's been a very good day for Canada in the sense that we made a run for the C$1.01 (level), we've broken out of our range, we've broken through the 50-day (moving average) ... all of that is positive for CAD," Sutton said.
Against the sinking yen, the Canadian dollar hit its strongest level since the height of the financial crisis in late 2008.
The comments from the ECB head reversed early Canadian dollar weakness on data showing that the number of Americans filing new claims for unemployment benefits hit a four-month high last week, a potential sign the US labor market recovery lost steam in March.
That, combined with weaker-than-expected ADP private-sector employment data on Wednesday has analysts ratcheting back expectations for the closely watched monthly US payrolls and unemployment report due out on Friday. Canada's monthly job creation and unemployment rate data are also due out on Friday.
Economists polled by Reuters are expecting 8,500 new jobs in Canada for the month of March, a moderation from the unexpected 50,700 surge in February. US nonfarm payrolls are expected to have risen 200,000 in March.
The price of Canadian government debt was higher across the curve. The two-year bond was up 1 Canadian cent to yield 0.990 percent while the benchmark 10-year bond rose 38 Canadian cents to yield 1.786 percent.
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