Canadian Dollar Trades Within One Cent of Parity on European-Debt Concern

Canada’s dollar traded within one cent of parity with its U.S. counterpart as stocks and commodities fluctuated on concern Europe’s debt crisis will erode demand for higher-returning assets.

The Canadian currency approached a seven-month low earlier, before a report tomorrow forecast to show growth slowed in Canadian industrial companies’ use of their production capacity from April to June. Toronto-Dominion Bank reduced its forecast for the nation’s growth. The currency erased losses after German Chancellor Angela Merkel said she’s confident the euro’s stability can be secured.

“Europe, and more specifically developments in Greece, are clearly dictating the flow in foreign exchange,” Jack Spitz, managing director of foreign exchange at National Bank of Canada, said by phone today from Toronto.

The Canadian currency appreciated 0.2 percent to 99.03 cents per U.S. dollar at 12:01 p.m. in Toronto, after earlier falling as much as 0.5 percent to 99.77 cents. It closed at 99.27 cents yesterday, when it reached C$1.0027, the weakest level since Jan. 31. One Canadian dollar buys $1.0098.

The Standard & Poor’s 500 Index gained 0.2 percent after rising as much as 1 percent and falling 0.4 percent. The S&P GSCI Spot Index of commodities was little changed after increasing 0.6 percent and falling 0.4 percent. Raw materials account for about half of Canada’s export revenue.

Canada’s currency, nicknamed the loonie, reached the weakest level since January yesterday against the greenback, which touched the strongest since February versus Europe’s 17- nation currency on speculation a Greek default will lead to a spiraling sovereign-debt crisis and spread to banks.