TORONTO — The Canadian dollar closed lower Wednesday, losing early momentum amid questions over whether France and Germany are putting the finishing touches on a massive expansion of the Eurozone’s bailout fund.
The loonie lost 0.56 of a cent to 98.02 cents US.
It had jumped as high as 99.15 cents US as risk appetite improved after The Guardian newspaper in London reported Tuesday that the fund could be raised to as high as C3 trillion from the current C440 billion.
“The reaction of markets suggests how desperately they want a solution (to the debt crisis),” said Scotiabank chief currency strategist Camilla Sutton.
However, skepticism grew after German Finance Ministry spokesman Martin Kotthaus, said there was no agreement yet in the eurozone on how to boost the lending capacities of the bailout fund — the European Financial and Stability Facility, or EFSF — beyond the C440 billion it has available.
Expanding the bailout fund is not an option, but the aim is to maximize the possible impact of the committed funds, he said.