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Canadian dollar moves lower amid fresh worries about European banks
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The Canadian Press
The Canadian dollar headed lower as investors avoided risk amid the latest round of worry about European banks.
The loonie lost 0.31 of a cent to 98.47 cents US.
However, the Canadian dollar moved off the lows of the morning in the wake of some encouraging employment news from the country's biggest trading partner a day before the release of the U.S. non-farm payrolls report.
Payroll firm ADP said the American private sector created 325,000 jobs during December.
Economists had estimated that the economy created a total of about 140,000 jobs last month.
"Therefore, today’s number will certainly increase expectations for a much heartier gain in tomorrow’s report," said CIBC World Markets economist Andrew Grantham.
"Although tomorrow’s figures will be most crucial, the ADP survey adds to growing evidence that the U.S. labour market may have turned a corner."
Canadian employment data for December will also be released Friday.
European worries were front and centre amid worries that banks will struggle to raise much-needed new capital.
Trading in UniCredit SpA, Italy’s largest bank, was suspended for the second day running Thursday after shares tumbled further in the wake of a heavily-discounted share offering. UniCredit is trying to raise €7.5 billion to meet new European requirements for banks to shore up capital reserves.
In Spain, the new conservative government said it expects the country’s banks to come up with additional provisions of up to €50 billion, which amounts to four per cent of Spain’s Gross Domestic Product, in extra provisions on bad property assets.
Meanwhile, France’s borrowing rates rose slightly in a bond auction on Thursday as investor demand eased.
The majority of bonds sold Thursday were 10-years, which markets eye as a benchmark of investor confidence. Demand for them surpassed the supply but was considerably less than at an auction in December. The yield or interest rate on the 10-years was 3.29 per cent, up from 3.18 per cent last time. In total, €4.02 billion were sold.
The latest round of worry from the eurozone sent the euro to a 15-month low of US$1.2815.
The latest flight from risk sent oil and metal prices lower.
The February crude contract on the New York Mercantile Exchange declined 18 cents to US$103.04.
The March copper contract on the Nymex dipped one cent to US$3.42 a pound.
Bullion also stepped back with the February contract in New York down 30 cents to US$1,612.40 an ounce.
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