Loonie flat, early U.S. dollar strength moderates amid European debt worries

TORONTO – The Canadian dollar shook off early losses to close flat against the greenback Monday.

The loonie was unchanged from Friday’s close at 102.02 cents US.

The American currency earlier made sharp gains against other currencies, particularly the euro, after a weekend meeting of eurozone finance ministers failed to agree on an immediate release of bailout funds to Greece.

Though the finance ministers of the 17 countries that use the euro agreed to hand over the next bailout instalment worth euro 12 billion (US$17 billion), they said they would only do that if the Greek Parliament backed further austerity measures.

But there was great uncertainty as to whether the Greek government can push through those new measures.

“(The ministers) have reiterated that they aren’t going to arrive at a solution to the Greek situation until around mid-July,” said BMO Capital Markets senior economist Benjamin Reitzes.

“This isn’t really new information, as last week EU Commissioner (Olli) Rehn said a deal wouldn’t be fully worked out until July 11.”

The euro moved as low as US$1.4191 earlier in the session but by late in the afternoon the continental currency was at US$1.4303.

Tumbling oil prices had put pressure on the Canadian dollar earlier in the session, and it fell as low as 101.53 cents US. The July crude contract on the New York Mercantile Exchange was up 25 cents at US$93.26 a barrel after the rising U.S. dollar earlier pushed oil as low as US$91.14.

A stronger greenback usually helps depress oil prices, which are denominated in dollars, as it makes oil more expensive for holders of other currencies.

Metal prices also retreated with the July copper contract on the Nymex down three cents at US$4.07 a pound.

Nervous investors pushed bullion higher for a fifth day with the August gold contract in New York up $2.90 at US$1,542 an ounce.

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