TORONTO: Canada's dollar retreated after soaring to near parity with the US dollar on Thursday after European Central Bank President Mario Draghi did not unveil any concrete measures to deal with the euro zone debt crisis.
Draghi heightened speculation of further bank purchases of Italian and Spanish bonds when he said last week that he would do "whatever it takes to preserve the euro."
However, Draghi stopped short of providing concrete measures. Instead, he said the ECB will draw up a mechanism in the coming weeks to make outright purchases to stabilize stressed euro zone borrowing costs.
"It seems the ECB was caught off guard by the aggressive rhetoric from Draghi last week," said Dean Popplewell, chief currency strategist at OANDA.
"Draghi came out of the gate swinging. Once the market realized there was no firm action and that this is still a work in progress ... risk-off was again applied rather quickly."
The Canadian dollar soared to a session high C$1.0002, or 99.98 US cents, as Draghi began a press conference but then quickly hit the lowest levels of the session at C$1.0068.
At 9:10 a.m. (1310 GMT), the Canadian dollar was at C$1.0053 against the greenback, or 99.47 US cents, virtually flat from Wednesday's North American finish at C$1.0052, or 99.48 US cents.
"We expect that by September the ECB will be in a better position to announce the details," said Avery Shenfeld, chief economist at CIBC World Markets.
The disappointment follows a statement by the Federal Reserve on Wednesday. The US central bank said the economy was weaker but left policy on hold, and investors shifted their focus to the European Central Bank.
The Fed stopped short of offering new monetary stimulus even as it signaled further bond buys could be in store, sending riskier assets like stocks and some metals prices like copper lower.
Elsewhere on Thursday, data also showed the number of Americans filing new claims for jobless benefits rose less than expected last week.
Canadian bond prices were higher across the curve with the two-year bond up by 5 Canadian cents to yield 1.065 percent, and the benchmark 10-year bond climbed 25 Canadian cents to yield 1.684 percent.
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