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Loonie higher after European Central Bank disappoints traders, euro falls

The Vancouver Winter Olympics loonie is displayed encased in plastic in 2011. THE CANADIAN PRESS/Darryl Dyck
August 02, 2012 - 12:24 PM

TORONTO - The Canadian dollar moved higher on Thursday after comments from the European Central Bank disappointed traders.

The loonie was up 0.07 of a cent to 99.55 cents US near midday.

The ECB decided against taking new action to attack the continent's debt crisis, as Mario Draghi dashed earlier hopes that significant steps would be made.

A week ago, Draghi promised to do "whatever it takes" to preserve the euro.

Afterwards, the euro lost ground against the U.S. dollar.

"It looks like the ECB was caught off guard by Draghi's verbal intervention last week, and while there was a consensus that action was needed to address soaring borrowing costs for peripheral countries, there wasn’t time to come to decisions on how that should be done," said CIBC chief economist Avery Shenfeld in a note.

"We expect that by September, the ECB will be in a better position to announce the details."

In commodities, the September crude contract on the New York Mercantile Exchange fell 95 cents to US$87.96 a barrel.

The December gold contract fell $10.70 to US$1,596.60 an ounce.

In U.S. data, more people applied for U.S. unemployment benefits last week, though the data was likely skewed higher by seasonal factors.

Weekly applications increased by 8,000 to a seasonally adjusted 365,000, the Labor Department said Thursday. The four-week average, a less volatile measure, fell for the sixth straight week to 365,500, the lowest since March 31.

News from © The Canadian Press, 2012
The Canadian Press

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