Canada Afternoon: C$ Ends Slightly Lower In Narrow Trading

TORONTO (Dow Jones)--The Canadian dollar ended slightly lower Thursday, sharing in the global tendency toward narrow and inconsequential currency movements ahead of Friday's key U.S. October non-farm payrolls report. Canada will also release its October employment report early Friday.

The U.S. dollar was trading at C$1.0659 at 3:35 p.m. EST (2035 GMT), from C$1.0632 at 8:00 a.m. EST (1300 GMT), and from C$1.0620 late Wednesday.

Although continued strength in global equity markets and some commodity prices was in evidence Thursday, there was a marked unwillingness among currency players for any form of risk-taking which would typically favor higher-yielding currencies like the Canadian dollar.

Most of the caution stemmed from the approach of Friday's employment reports, though mostly status-quo interest rate decisions early in the day from both the European Central Bank and the Bank of England also contributed to the stasis.

Both monetary authorities held their policy rates steady as expected, but in keeping with the Federal Reserve's statement Wednesday, also offered forward-looking outlooks that weren't much different than their previous communiques, offering no chance for currency players to act on projected shifts in monetary policy dynamics.

In this environment, it was difficult for the Canadian dollar to show much movement in either direction, particularly since the currency has already rallied quite substantially this week back from recent one-month lows.

The Canadian dollar's earlier slump was motivated in part by repeated expressions of discontent with its strength from the Bank of Canada, and the recent reversal from the mid-C$1.0800s now suggests that the currency may be settling in to a new and somewhat weaker trading range relative to the one that prevailed prior to mid-October.

"The Canadian dollar remains largely range-bound, with the Bank of Canada’s recent comments making traders afraid to push it through C$1.0550 towards par, but with support in the C$1.0900 area provided by U.S. dollar weakness," said market analyst Karl Schamotta of Custom House in Victoria, B.C.

These are the exchange rates at 3:35 p.m. EST (2035 GMT), 8:00 a.m. EST (1300 GMT), and late Wednesday.

 
   USD/CAD     1.0659      1.0632     1.0620 
   EUR/CAD     1.5862      1.5812     1.5790 
   CAD/JPY      85.16       85.02      85.45 

-By Paul Evans; Dow Jones Newswires; 416-306-2022; paulr.evans@dowjones.com

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(END) Dow Jones Newswires

November 05, 2009 15:39 ET (20:39 GMT)


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