Loonie reaches highest level since November

TORONTO (Reuters) - The Canadian dollar reached parity with its U.S. counterpart for the first time in nearly three months on Thursday as new U.S. jobless data and Wednesday's move by the U.S. Federal Reserve to keep rates low until 2014 signaled the U.S. economic recovery may be faltering.
The Canadian currency breached parity after the U.S. central bank said it would likely keep interest rates near zero until at least late 2014 and Fed Chairman Ben Bernanke pledged to embark on a further round of so-called quantitative easing, or QE3, if warranted by economic conditions.
Thursday's U.S. jobless data added to the doubt, as weekly claims rose to 377,000, above a consensus forecast for 370,000.
"Canada is definitely feeling the positive effects of a weaker U.S. dollar," said C.J. Gavsie, managing director of foreign exchange sales at BMO Capital Markets. "This will continue assuming that story continues."
At 10:25 a.m. (1525 GMT), the Canadian currency stood almost even with the U.S. dollar after hitting a session high at C$0.9990, its strongest level since November 1.
On Wednesday, the currency finished at C$1.0035 to the U.S. dollar, or 99.65 U.S. cents.
The dollar's rally to parity is not good news for the Canadian exporters as it makes their goods less competitive in the U.S. market.
Gavsie said Canadian dollar rally has sparked increased buying of the greenback and selling of Canadian dollars by the Canadian business sector. He added that Canadian exports to the United States have been strongest when the currency is in the C$1.02 to C$1.04 range.
Gavsie said the Canadian dollar will likely trade around parity over the next week or two, but said pressures from Europe may then halt its momentum.
"As we do see some concern over the rest of Europe, outside of the Greek story, some of the risk-off aspects will come back into play and we will see some U.S. dollar strength," Gavsie said.
Market focus stayed on Greek debt on Thursday. Talks on a debt swap deal with the country's private creditors were set to resume as the clock ticks down to a March deadline, when Greece faces major bond redemptions.
Canadian government bond prices were mixed, with the one-year bond up 1 Canadian cent to yield 0.970 percent. The 10-year bond was unchanged at a yield of 2.044 percent.