Canada Morning: C$ Marginally Lower In Indeterminate Trading

TORONTO (Dow Jones)--The Canadian dollar is slightly lower in relatively narrow, choppy dealings early Tuesday, as the currency is for the moment at least mired in a sideways pattern and lacking clear directional signals.

The U.S. dollar was trading at C$1.2450 at 10:24 a.m. EST (1524 GMT), from C$1.2456 at 8:00 a.m. EST (1300 GMT) and C$1.2436 late Monday.

The Canadian dollar so far Tuesday has moved erratically though a C$1.2385 to C$1.2487 range, as North American equity markets attempt without much conviction to stabilize following Monday's massive selloff, and as oil and other commodities prices remain close to their levels of a day previous.

Lacking any directional impulses from these correlated markets, Canadian dollar activity has been similarly muted, though the currency remains weighed down by the prevailing economic uncertainties, complicated now by the messy situation in Canada's capital Ottawa, where a coalition of opposition parties is preparing for a no-confidence vote early next week that would spell the end of the minority Conservative government.

The political situation at the national level in Canada remains very fluid and volatile, and many currency watchers believe that while the Canadian dollar has yet to see any sizeable depreciation due to the crisis, that could change as the likely Dec. 8 no-confidence vote in the nation's parliament approaches.

In the immediate near-term however, the Canadian dollar is likely to continue looking for direction from equities and other asset prices, and retain its keen sensitivity to the ebb and flow of global risk aversion.

"The market is really searching for direction here in the last month of the year," said Steve Butler, director of foreign exchange at Scotia Capital in Toronto. "This is a market where you want to just be reacting and not thinking too much, since it's so flow-driven, and people are just chasing their tails around trying to preserve what they have."

Canadian bonds are mostly lower in thin trading early Tuesday, with the benchmark Canada 10-year bond yielding 3.19%.

These are the exchange rates at 10:24 a.m. EST (1524 GMT), 8:00 a.m. EST (1300 GMT), and late Monday.

   USD/CAD     1.2450     1.2456     1.2436 
   EUR/CAD     1.5866     1.5777     1.5703 
   CAD/JPY      75.14      74.80      74.87 

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

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(END) Dow Jones Newswires

December 02, 2008 10:30 ET (15:30 GMT)


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