TORONTO: The Canadian dollar rose modestly against the greenback on Thursday, boosted by an increase in investor risk appetite after the European Central Bank announced further actions to boost the euro zone economy.
The loonie gained against the euro as ECB President Mario Draghi said the central bank will offer banks a targeted long-term refinancing operation (LTRO) to persuade them to lend. Draghi also said the ECB was preparing to purchase asset-backed securities in the future.
The ECB had earlier announced it would cut interest rates, imposing negative rates on its overnight depositors. Against the Canadian dollar, the euro was down at C$1.4816.
"Draghi has always notably over-promised and under-delivered, and tries to use his words more than anything, so to come through with action today, it's obviously caught the market a little bit by surprise," said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary.
"They've definitely done a good job throwing a lot of weight behind it."
The announcement sharpened investor appetite for risky assets, lifting higher-yielding assets including commodity-related currencies, Smith said.
The Canadian dollar was at C$1.0935 to the greenback, or 91.45 US cents, a tad stronger than Wednesday's close of C$1.0939, or 91.42 US cents.
Canadian economic data had little impact on the loonie as the value of building permits rose in April but fell short of expectations.
Canadian government bond prices were lower across the maturity curve, with the two-year off half a Canadian cent to yield 1.067 percent and the benchmark 10-year down 15 Canadian cents to yield 2.368 percent.
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