* C$ at C$1.0053 vs US$, or 99.47 U.S. cents
* Currency soars to 99.98 U.S. cents
* Then hits session low of C$1.0068 on ECB disappointment
* Bonds higher across curve
By Jennifer Kwan
TORONTO, Aug 2 (Reuters) - Canada's dollar retreated after
soaring to near parity with the U.S. dollar on Thursday after
European Central Bank President Mario Draghi did not unveil any
concrete measures to deal with the euro zone debt crisis.
Draghi heightened speculation of further bank purchases of
Italian and Spanish bonds when he said last week that he would
do "whatever it takes to preserve the euro."
However, Draghi stopped short of providing concrete
measures. Instead, he said the ECB will draw up a mechanism in
the coming weeks to make outright purchases to stabilize
stressed euro zone borrowing costs.
"It seems the ECB was caught off guard by the aggressive
rhetoric from Draghi last week," said Dean Popplewell, chief
currency strategist at OANDA.
"Draghi came out of the gate swinging. Once the market
realized there was no firm action and that this is still a work
in progress ... risk-off was again applied rather quickly."
The Canadian dollar soared to a session high
C$1.0002, or 99.98 U.S. cents, as Draghi began a press
conference but then quickly hit the lowest levels of the session
at C$1.0068.
At 9:10 a.m. (1310 GMT), the Canadian dollar was at
C$1.0053 against the greenback, or 99.47 U.S. cents, virtually
flat from Wednesday's North American finish at C$1.0052, or
99.48 U.S. cents.
"We expect that by September the ECB will be in a better
position to announce the details," said Avery Shenfeld, chief
economist at CIBC World Markets.
The disappointment follows a statement by the Federal
Reserve on Wednesday. The U.S. central bank said the economy was
weaker but left policy on hold, and investors shifted their
focus to the European Central Bank.
The Fed stopped short of offering new monetary stimulus even
as it signaled further bond buys could be in store, sending
riskier assets like stocks and some metals prices like copper
lower.
Elsewhere on Thursday, data also showed the number of
Americans filing new claims for jobless benefits rose less than
expected last week.
Canadian bond prices were higher across the curve with the
two-year bond up by 5 Canadian cents to yield 1.065
percent, and the benchmark 10-year bond climbed 25
Canadian cents to yield 1.684 percent.
The euro edged higher against the U.S. dollar as the markets watched out for the European Central Bank to announce a policy stimulus measure amid a fair degree of skepticism.
The ICE dollar index DXY -.00% , which measures the greenback against a basket of six major global currencies, dropped to 82.868 from 83.07 in North America late on Wednesday.
Fed gives stronger signals of action
The Fed signaled more strongly it will take action as needed to boost the economy but held back from immediately starting a new round of bond buying or taking other steps.
The WSJ dollar index XX:BUXX -.00% , which gauges the greenback moves against some of the other heavily traded currencies, fell to 71.59 from 71.74.
The euro EURUSD +0.00% was changing hands at $1.2341, compared with $1.2232 in New York trade, where it lost ground after the Federal Reserve kept its low interest rate unchanged, and decided not to take any action.
The ECB and Bank of England both left key interest rates unchanged at policy meetings. A news conference with ECB President Mario Draghi will begin shortly and be closely watched for any stimulus moves to help battle the sovereign-debt crisis.
Scope for disappointment
A report in a German newspaper suggested that the ECB is mulling a two-pronged bond-buying plan with the European Stability Mechanism, which helped shore up the euro and European stocks. ECB weiging two-pronged bond-buying plan: report
But analysts said scope for disappointment remains large.
“Expectations for aggressive policy moves from the ECB were certainly elevated, but given the stance of the Germans over the last couple of days, some of the fast money has exited risk assets, as traders come to terms that inaction by Mario Draghi and his team will cause a sharp sell down in equities, commodities and risk forex,” said Chris Weston, an institutional dealer at IG Markets.
Societe Generale, meanwhile, found in a survey of clients that 69% of those polled think the ECB will disappoint after its meeting Thursday. Among those surveyed, 50% of the banks, 68% of the hedge funds, 71% of asset managers and all corporate clients said they the ECB won’t meet expectations.
Among other major currency pairs, the dollar USDJPY -.00% was trading at ¥78.25 against the Japanese unit, compared with ¥78.43 seen late the prior session.
The British pound GBPUSD +0.00% was changing hands for $1.5615 from $1.5552, while the Australian dollar AUDUSD +0.00% was buying $1.0481, compared with $1.0466.
