Forexpros – The U.S. dollar climbed to a more than one-week high against the Canadian dollar on Monday, as Spanish borrowing costs hit euro-era highs amid mounting concern that Spain will require a full-scale international bailout.
USD/CAD hit 1.0204 during early U.S. trade, the pair’s highest since July 12; the pair subsequently consolidated at 1.0199, advancing 0.70%.
The pair is likely to find support at 1.0130, the session low and resistance at 1.0229, the high of July 11.
The yield on Spanish 10-year bonds was at 7.5%, above the 7% threshold widely considered unsustainable if a country is to remain solvent, amid growing fears that Spain will need a full bailout after the state of Murcia followed Valencia in requesting financial aid from Madrid over the weekend.
The spike in borrowing costs came despite euro zone finance ministers approving a package of as much as EUR100 billion to bailout Spain’s banks on Friday.
Earlier Monday, Spain’s Economy Minister Luis de Guindos denied that Madrid will need a full-scale bailout.
Meanwhile, fears over a Greek exit from the euro zone resurfaced, amid worries over whether Athens can meet the conditions of its international bailout ahead of a meeting with the Troika on Tuesday.
The Canadian dollar also came under pressure from sharply lower oil prices, with crude futures for delivery in September tumbling 3.71% on the New York Mercantile Exchange, to trade at USD88.42 a barrel.
Raw materials, including oil account for about half of Canada’s export revenue.
The loonie, as the Canadian dollar is also known, was hovering close to a record high against the euro, with EUR/CAD easing up 0.10% to 1.2326 from the session low of 1.2281.
Neither the U.S nor Canada were to release any significant economic indicators on Monday, so markets looked set to remain focused on developments in the euro zone.
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