Friday 26 June 2009

Canada Afternoon: C$ Ends Up In Mostly Sideways Activity

Canada Afternoon: C$ Ends Up In Mostly Sideways Activity

TORONTO (Dow Jones)--The Canadian dollar ended slightly higher but off its best levels of the day Friday, as the currency responded to a global downtrend for the U.S. dollar but otherwise displayed the same lack of conviction that kept it meandering erratically in a range all week.

The U.S. dollar was trading at C$1.1532 at 3:35 p.m. EDT (1935 GMT), from C$1.1484 at 8:00 a.m. EDT (1200 GMT) and C$1.1570 late Thursday.

An improved risk environment and stronger commodity prices - notably a rise in oil prices back above $70 per barrel - helped key a strong early tone for the Canadian dollar that saw it trade to its intraday high at C$1.1445.

But while the U.S. dollar continued to struggle against a wide range of currencies throughout the day, the Canadian dollar faded its early rally and wavered erratically on both sides of the C$1.1500 figure for the remainder of the session.

The inability of equity markets to rally and the inability of oil prices to hold on to initial gains weakened the Canadian currency, and perpetuated its recent rather aimless drift around the C$1.1500 mark.

Lacking any major directional incentives at the moment along with other currencies, the Canadian dollar is generally seen as settling into a near-term range trading pattern.

The currency has corrected markedly lower from overbought levels in the C$1.0800 area from early June, and the U.S. dollar likewise has been unable to extend its corrective rally past the C$1.1650 area, suggesting that the pair may carve out a trading range between these two extremes for a while.

"The Canadian dollar still seems like it's on a bit of vulnerable ground, but I think it would be a real grind to see it weaken much more from here, in the short-term anyway," said Steve Butler, director of foreign exchange at Scotia Capital in Toronto.

These are the exchange rates at 3:35 p.m. EDT (1935 GMT), 8:00 a.m. EDT (1200 GMT), and late Thursday.

   USD/CAD     1.1532      1.1484     1.1570
EUR/CAD 1.6228 1.6173 1.6182
CAD/JPY 82.54 83.08 82.88

-By Paul Evans; Dow Jones Newswires; 416-306-2022;

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(END) Dow Jones Newswires

June 26, 2009 15:35 ET (19:35 GMT)

Copyright 2009 Dow Jones & Company, Inc.

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