Canadian dollar coins, or loonies, are shown with U.S dollars in this April 6, 2010 photo in Montreal. THE CANADIAN PRESS/Ryan Remiorz
June 12, 2012 - 8:34 AM
TORONTO - The Canadian dollar was higher Tuesday despite unease over a bailout hammered together on the weekend for Spain's banks and lower commodity prices.
The loonie rose 0.23 of a cent to 97.2 cents US.
"Commodity currencies are generally outperforming, as they’ve been hit hard over the past two months and look a little more attractive around these levels," said senior economist Benjamin Reitzes of BMO Capital Markets.
"Of course, that all depends on what happens in Europe. This weekend’s bailout for Spain’s banks has done little to calm market fears."
Eurozone finance ministers agreed Saturday to make €100 billion available to Spain to revive banks crushed by bad real estate loans. But traders worry the money will just add to the Spanish government’s already considerable debts and perhaps force it to seek its own sovereign bailout.
As a sign of investor wariness of Spain, the yield on its 10-year benchmark bond shot up. It was still climbing Tuesday, up 0.14 of a point to 6.65 per cent. That’s dangerously close to the seven per cent yield that has forced other countries to seek rescue loans. Italy’s yields were also rising.
There is also nervousness ahead of Sunday’s election in Greece. The worry is that a left-wing party that advocates tearing up the country’s bailout agreement will be the big winner. If that happens, Greece could end up leaving the eurozone with unpredictable consequences for other debt-laden eurozone countries such as Italy.
Oil prices were down for a fourth session as traders also closely watched a quarterly meeting of the Organization of Petroleum Exporting Countries on Thursday.
Some members of the cartel have suggested recently that OPEC is producing too much crude and the group could decide to cut supplies to help boost prices. The July crude contract on the New York Mercantile Exchange dropped 39 cents to US$82.31 a barrel.
July copper edged a penny lower to US$3.34 a pound while August gold dropped $6.80 to US$1,590 an ounce.
News from © The Canadian Press, 2012