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Canada dollar little changed, market awaits Fed

TORONTO: The Canadian dollar ended little changed on Monday after reca turing some of the ground lost early in the session when strong US economic data aroused fears that US interest rate increases could out ace those in Canada, some traders said.

But trading flows were light and layers were staying on the sidelines in advance of the US Federal Reserve's olicy-making o en market committee meeting later this week, market watchers said.

"There's very little going on," said one Toronto currency trader with a major Canadian bank.

The Canadian dollar closed at C$1.4456 (69.18 US cents) on Monday morning after closing the revious session at C$1.4455 (69.18 US cents).

In the US, it was re orted on Monday morning that ersonal s ending rose 0.8 ercent in December, while ersonal income rose 0.3 ercent.

News that Canadian GDP grew by 0.6 ercent in November - higher than the ex ected 0.4 ercent increase - was largely ignored by the market, traders said.

"We weakened off, I think, as a result of some fears over rates, and now we're just settling back," the trader said.

Harvinder Kalirai, an economist with IDEAGlobal.com, said there is concern in the market about whether the Bank of Canada would match the US Federal Reserve if it o ts to raise interest rates by 50 basis oints at the end of its o en markets committee meeting later this week.

The strong Canadian data may have cemented the view that the Canadian central bank will match a 25-basis- oint increase from the Fed, but there is concern that it wouldn't necessarily match a 50-basis- oint hike from the US monetary authority, he said.

"The momentum that (Bank of Canada Governor Gordon Thiessen) talked about last week is very much intact, and it does suggest that the Bank of Canada should be moving in ste with the Fed on the 25-basis- oint front. (Fifty basis oints) is a little bit more of an o en debate," he said.

In cross-trading against major currencies, the Canadian dollar was at 74.22 yen and at C$1.4011 against the euro. The Canadian dollar was at A$1.0850 against the Australian dollar.-Reuters