* C$ at C$0.9980 vs USD, or $1.0020
* Stronger-than-expected European data supports
* Political uncertainty in Spain, Italy still weighs
* C$ strongest against yen since mid-2010
By Solarina Ho
TORONTO, Feb 5 Canada's dollar notched marginal
gains against its U.S. counterpart on Tuesday, helped by
better-than-expected euro zone data, but the currency remained
under pressure as political uncertainty in Spain and Italy
Euro zone data showed the region's services sector improved
more than expected last month.
However, investors were uneasy with Spain's ruling party,
which is caught in a corruption scandal that threatens the prime
minister's credibility and his fight to get the economy back on
Meanwhile, Italian polls showed former prime minister Silvio
Berlusconi regaining ground ahead of elections this month.
"Overall we're taking our cues from some of the concerns
over in Europe ... I think anytime there's a negative tone in
the global markets, Canada does tend to lose a little bit of
ground," said Don Mikolich, executive director, foreign exchange
sales at CIBC.
"It has people thinking that we could see a retest above
par. The C$1.0050 area had been the previous high. I think
that's a potential target over the next little bit," Mikolich
At 8:31 a.m. (1331 GMT), the Canadian dollar was
trading at C$0.9980 to the U.S. dollar, or $1.0020, not far from
Monday's North American session close of C$0.9986, or $1.0014.
Earlier, it touched C$0.9995, or $1.0005.
The currency was likely to trade between C$0.9950 and
C$0.9990 on Tuesday, according to an RBC research note.
Against other currencies, the Canadian dollar was mostly
It hit its strongest level against the Japanese yen
since mid-2010, as some Japanese companies stepped up
hedging against further weakness on expectations of more
aggressive easing by the Bank of Japan.
It also firmed to C$1.3441 against the euro, its strongest
level since Jan. 25.
Canadian government bond prices fell across the curve, with
the two-year Canadian government bond easing 4
Canadian cents to yield 1.176 percent and the benchmark 10-year
bond sliding 35 Canadian cents to yield 2.025