Forexpros – The U.S. dollar was little changed against the Canadian dollar on Monday, hovering close to parity, as market sentiment remained subdued amid lingering doubts over the effectiveness of a European Central Bank plan to stem the debt crisis in the euro zone.
USD/CAD hit 0.9996 during early U.S. trade, the session low; the pair subsequently consolidated at 1.0016, inching up 0.04%.
The pair was likely to find support at 0.9978, Friday’s low and a three-month low and near-term resistance at 1.0055, the high of August 1.
The Canadian dollar rose to parity against the greenback for the first time in three months on Friday, after stronger-than-forecast U.S. jobs data eased concerns over the outlook for economic growth.
Official data showed that the U.S. economy added 163,000 jobs in July, the biggest increase since February and outstripping expectations for an increase of 100,000.
But the U.S. unemployment rate unexpectedly ticked up to 8.3%, from 8.2% in the preceding month, keeping alive speculation over the possibility of further monetary stimulus from the Federal Reserve.
Market sentiment remained fragile after ECB indicated last week that it may restart its bond buying program, to help lower Spanish and Italian borrowing costs.
Doubts remained after ECB head Mario Draghi said any such action was conditional on euro zone governments experiencing difficulty on bond markets applying to the bloc’s bailout funds to purchase government bonds and accepting strict conditions and supervision.
Meanwhile, renewed concerns that Spain may yet request a full-scale sovereign bailout kept the yield on the country’s 10-year bonds hovering close to the critical 7% threshold widely seen as unsustainable if a country is to remain solvent.
The loonie, as the Canadian dollar is also known, was fractionally higher against the euro, with EUR/CAD dipping 0.06% to 1.2395.
Neither the U.S. nor Canada were to release any significant economic data on Monday, so markets looked likely to continue to take cues from developments in the euro zone.
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