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Canada dollar ends down, technical pressures cited

TORONTO: The Canadian dollar ended significantly lower on Monday, a move some market watchers linked to short-term technical pressures on the currency.

The Canadian dollar closed at C$1.4568 (68.65 US cents) on Monday after ending at C$1.4490 (69.01 US cents) in the previous session.

"It's been faced with deteriorating short-term technicals since mid-week last week when (the US dollar) once again failed to move down under C$1.4400. There's been a upward trending channel that is building," said Steve Demers, director of foreign exchange at National Bank of Canada in Montreal.

Corporate interest helped contain the Canadian dollar's weakness somewhat, but faded as the day progressed, he added.

Speculative players were abandoning Canadian dollar positions taken out in earlier sessions, Demers said.

"We've seen speculators that have been long Canada for a little while start to slowly move out their positions," he said.

The Canadian unit also failed to secure any support from other secondary currencies on Monday, Demers said, pointing to weakness in the Australian dollar.

"There is of course also a little bit of weakness on Thiessen speaking on Wednesday, giving an update to the semiannual monetary policy report, but it is not that which is primarily shaking this market, in our mind," he said.

On Wednesday, the Bank of Canada releases the update to its semiannual monetary policy report at 10:30 a.m. (1530 GMT). An hour later the bank's Governor Gordon Thiessen is scheduled to hold a news conference on the update.

Later this week, US Federal Chairman Alan Greenspan is expected to deliver his semiannual Humphrey-Hawkins congressional testimony on Thursday.

Also due for release in the United States this week are industrial production and capacity utilization data on Tuesday, the producer price index for January on Thursday, and the consumer price index on Friday.

Trade data for December will be released in both Canada and the United States on Friday, while Canadian manufacturing data for the same month is due out on Tuesday.

One Toronto-based currency trader said the Canadian unit will have to fall below C$1.4600 before the downward move acquires any real momentum.

"I think if we break above C$1.4600, then it starts to get a little interesting," he said.

The trader described trading flows on Monday as average.

In cross-trading against major currencies, the Canadian dollar was at 74.74 yen and at C$1.4241 against the euro. The Canadian dollar was at A$1.0943 against the Australian dollar. -Reuters