Speculation that Spain is poised to seek a bailout rippled through currency markets Friday, giving a small boost to the Canadian dollar.
Early on, the loonie regained ground lost Thursday, climbing 0.3 per cent from the close to more than half a cent above $1.02 (U.S.). By the close, however, the dollar had surrendered most of those gains and was trading just a shade higher, up 0.01 of a cent to $1.0242.
The initial optimism, said senior currency strategist Camilla Sutton of Bank of Nova Scotia, was related to reports that Spain is working to secure a rescue, which buoyed global markets. Once a bailout is approved, she added, the European Central Bank and the monetary union’s rescue fund would be able to step in and begin buying Spanish bonds, in turn driving down borrowing costs.
“The focus remained on Europe overnight and press reports that behind-the-scenes negotiations will lead to a face-saving compromise for Spain ... have been positive for [the euro] and positive for risk appetite more generally,” added Adam Cole of RBC Europe.
“So long as nothing comes along to derail this before the reported announcement date (next Thursday) it should be sufficient to keep a bid under risk assets.”
In commodities, November crude on the New York Mercantile Exchange moved up 48 cents to $92.89 a barrel, meaning that the price of oil lost 6 per cent on the week.
The December bullion contract increased $7.80 to end the week at $1,778 an ounce. December copper was up 3 cents to $3.79 a pound.