February 17, 2015 - 9:40 AM
TORONTO - The Canadian dollar was higher Tuesday amid a higher tolerance for risk on financial markets despite concern about Greece's future in the eurozone.
The loonie advanced 0.33 of a cent to 80.58 cents US.
Worries about a possible Greek exit from the eurozone grew after talks between the country's finance minister and his 18 eurozone counterparts broke down Monday.
Greece was told it has to ask for an extension to its bailout program before further negotiations on the country's future financing and economic course can take place. But Greece's new Syriza government refused, saying it has a strong mandate to reject the austerity measures that have kept the country from financial collapse.
Without some sort of financing arrangements in place after the current bailout ends after Feb. 28, Greece would face real difficulties meeting its obligations, meaning bankruptcy and a potential exit from the euro would loom for Greece once again.
"Our base case is that we see Greece easing on demands; however the situation continues to be highly uncertain," said Camilla Sutton, chief FX strategist and managing director at Scotiabank.
Oil prices had made strong inroads the past two sessions, which also sparked solid gains in the Canadian currency. However, crude declined Tuesday, down $1.13 to US$51.65 a barrel.
"Oil prices, and particularly the ability of both Brent and West Texas Intermediate to close above their 50-day moving average ($55.56 and $52.19, respectively), is supporting the rally in the petrol currencies like (Norway and Canada) and continue to be a driving force behind Canadian dollar movement," Sutton said.
Metal prices were weak with the April gold bullion contract down $21.20 to US$1,205.90 an ounce while the March copper contract slipped four cents to US$2.57 a pound.
It is a light week for economic data with traders looking to Canadian retail trade data for December at the end of the week. In the U.S., investors will digest data on housing starts and the most recent leading indicator, a look at how the economy should perform six months from now.
Also, traders will examine the minutes from the latest interest rate meeting of the U.S. Federal Reserve. The document will be scrutinized for any hint about when the Fed might start hiking rates this year. Many analysts have said a recent run of strong economic data makes it difficult for the Fed not to raise rates as early as June.
News from © The Canadian Press, 2015