TORONTO: Canada's dollar rose to a one-week high on Friday as a deal among European leaders on measures to contain the region's debt crisis boosted investor confidence.
Investors were willing to take on more risk after euro zone leaders agreed on Friday to let their rescue fund inject aid directly into stricken banks from next year and intervene on bond markets to support troubled member states.
The agreement helped push the Canadian currency up more than 1.5 percent, while US and global stocks notched gains of 2 percent or more.
Oil prices soared more than 9 percent on optimism the measures would stem Europe's debt crisis and help revive global growth.
"The market was looking for nothing. They get something like this agreement," said John Curran, senior vice president at CanadianForex. "Expectations were very low. So getting something out of it has excited people."
David Bradley, director of foreign exchange trading at Scotiabank, characterized the global market move as a "risk rally."
"Everyone's buying risk after what happened, (and) the comments from Europe. I think this move has caught a lot of people off guard," he said.
Stronger than forecasted domestic data also aided the Canadian currency.
A rebound in oil output helped deliver surprisingly strong Canadian economic growth of 0.3 percent in April after two months of limp readings, according to Statistics Canada data released on Friday. The market had forecasted growth of 0.2 percent.
The Canadian currency ended at C$1.0181 to the greenback, or 98.22 US cents, after embracing a high of C$1.0166, or 98.37 US cents, its strongest since June 20. It was the currency's strongest percent gain move since August 2011. The Canadian dollar finished Thursday at C$1.0328 to the greenback, or 96.82 US cents.
Yields on 10-year Spanish and Italian debt retreated and the common currency rose more than 1.5 percent.
Canada mostly underperformed against most major currencies including the euro and commodity-linked New Zealand and Australian dollars.
The currency ended the week up 0.6 percent, and was higher by 1.4 percent for the month. It capped the quarter with a 2 percent loss.
Elsewhere, Canadian bond prices were lower across the curve with the two-year Canadian government bond sank 16 Canadian cents to yield 1.031 percent, while the benchmark 10-year bond dropped 56 Canadian cents to yield 1.737 percent.
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