Canadian $ firms on Greece hopes

TORONTO: The Canadian dollar was firmer against the US dollar on Tuesday, amid optimism that a solution could be reached over Greece's sovereign debt.

France's President Nicolas Sarkozy said French banks had reached a draft agreement with the authorities for banks to roll over Greek debt.

While the news settled investor nerves, the currency still traded within in a tight range ahead of parliamentary votes in Athens this week to approve unpopular austerity measures that are a precondition for international aid.

"The overall theme is, it's not specifically the Canadian dollar, obviously its global concerns," said John Curran, senior vice president at Canadian Forex, a commercial foreign exchange dealing firm.

"Even if we do get something positive out of Greece, it's going to be short lived. In the back of people's minds, there's a lot of caution in these markets."

Oil, a key Canadian export, provided some support as prices rose on the news over Greece, but gains were capped with oil heading for its worst month in a year.

At 8:45 a.m. (1245 GMT), the currency stood at C$0.9852 to the US dollar, or $1.0150, firmer than Monday's North American close of C$0.9867 to the US dollar, or $1.0135.

Investors will continue to monitor key data for further hints on the economic recovery, with US data, including consumer confidence, expected later on Tuesday and Canadian inflation data expected on Wednesday.

"CPI it has the possibility to make people think there could be a rate hike. There's not a chance," said Curran. "Even if inflation numbers are high, it's an opportunity to sell high. If anything, I think what you'll see is there will be stronger negative reaction to poor numbers than there would be to a positive, just in this backdrop."

Canadian bond prices were mostly lower across the curve as investors dipped back into riskier assets.

The two-year bond slipped 5 Canadian cents to yield 1.429 percent, while the 10-year bond gave back 15 Canadian cents to yield 2.924 percent.

Copyright Reuters, 2011