In early European deals on Thursday, the Canadian dollar strengthened to a 2-day high against its U.S. and Japanese counterparts as crude oil rose above $81 a barrel today on eased concern over Ireland’s debt crisis and a weaker dollar.
Investors sentiment has picked up after Ireland announced its agreement with the European Union to accept a bailout for its banking sector. Furthermore China announced food subsidies and price control actions to dampen inflation over basic products, which eased fears about highly likely monetary tightening measures by the PBOC.
Benchmark oil for December delivery climbed $1.05 to $81.49 a barrel at 4:39 am ET. The contract fell $1.90 to settle at $80.44 on Wednesday.
The Irish government is due to begin high level talks with representatives from the European Union, the European Central Bank, and the International Monetary Fund in Dublin today towards resolving the Republic’s fiscal crisis.
Reports suggest the government will try to prevent any increase in the 6 billion-euro worth of savings and spending cuts proposed for the 2011 budget and the 15 billion-euro target set for the next four years.
Most observers believe the Republic will eventually have to accept some form of a bailout deal from the E.U. and the IMF, given the parlous state of its quasi-nationalized banking sector.
The Canadian dollar is currently trading at a 2-day high of 1.0170 against the greenback and 81.83 against the yen, compared to yesterday’s close of 1.0247 and 81.23, respectively. If the Canadian dollar advances further, it may likely target 82.6 against the yen and 1.014 against the greenback.
But the Canadian dollar showed choppy trading against the euro today and it declined to a 1-week low versus the Aussie as strong equities supported the higher-yielding Australian dollar.
Investors now look forward to the New York session, in which the U.S. weekly jobless claims data for the week ended November 13, leading indicators for October and the Philadelphia Federal Reserve’s manufacturing survey results for November are slated for release.
Canada’s wholesale trade data for September and leading indicators for October are also expected in the North American session.