The Canadian dollar strengthened today, paring its previous losses, after the concern about the fiscal troubles in the Europe receded, driving the stocks up and increasing the bets that the central bank will increase the interest rates in June.

The confidence in the euro improved after some good news: China confirmed its willingness to invest in Europe and Spain has taken measures to reinforce its banking systems. And as there weren’t noticeable bad news lately, the short-term speculators are beginning to turn to the risk.

The analysts aren’t sure whether the central bank will raise the interest rates, putting the chances around fifty-fifty. Any turn of events in Europe may change this outlook dramatically. In any case, the comments of Mark Carney, the Governor of the Bank of Canada, expected to be hawkish.

USD/CAD dropped to 1.0498 as of 16:59 GMT today from its opening level of 1.0707. EUR/CAD traded at about 1.2967 after opening at 1.3034.

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