The Canadian dollar weakened slightly against its U.S. counterpart on Thursday but remained
near to parity, a day after rallying to finish above one-for-one footing versus the greenback for the first time since May 2008.
The Canadian dollar hit as high as $0.9964 to the U.S. dollar, or $1.004, on Thursday, and outperformed the euro and its sister commodity currencies -- the Australian and New Zealand dollars -- amid an overnight onset of risk aversion.
"(The Canadian dollar) pretty flat overnight, however, against the crosses doing a little bit better as the U.S. gained against most currencies except the yen and that came on the back of increased concerns about Greece going forward," said Matthew Strauss, senior currency strategist at RBC Capital Markets.
Euro-zone pressures mounted as higher costs to insure against a Greek default highlighted persistent concerns about Greece's debt problems and cut demand for risky assets. Oil prices hovered below $86 a barrel and gold prices eased in Europe, which could also affect the commodity-lined currency.
Early Thursday morning, the Canadian dollar was at $0.9995 to the U.S. dollar, or $1.0005, slightly lower than Wednesday's close at $0.9992 to the U.S. dollar, or $1.0008. Strauss said he expected the Canadian currency to keep trading around parity throughout the day, but the market was awaiting more direction.
"The attention is now already shifting firmly to next week's (Bank of Canada) meeting," he said.
Canadian bond prices moved higher across the curve, mirroring U.S. Treasuries that rose on Asian buying and after Federal Reserve Chairman Ben Bernanke cemented the view that interest rates would stay ultra-low for a protracted period to support growth.
The two-year government bond rose four Canadian cents to $99.225 to yield 1.922%, while the 10-year bond added 14 Canadian cents to $100.410 to yield 3.697%.
