20000128

Canada dollar ends down, but up from early losses

TORONTO: The Canadian dollar ended down slightly on Wednesday, but recovered from its early losses after a day of volatile trading, market sources said.

"It was a bit of a whippy day, I think a lot of people got whipped around a little bit," said one Toronto currency trader.

The currency closed at C$1.4384 (69.40 US cents) on Wednesday after ending at C$1.4370 (69.59 US cents) on Tuesday.

It weakened off, sliding toward the C$1.4414 area in early trading after Statistics Canada reported that retail sales rose 0.6 percent in November, falling significantly short of the expected 1.2% climb.

"There were a lot of American names coming and buying US dollars," the currency trader said.

The initial softening in the Canadian dollar was followed by interest in buying the currency against its Australian equivalent, enabling it to rebound from early lows, he said.

"Then there was a lot of Aussie/Canada selling the other way. Once we were up there, there was quite a few names selling Aussie/Canada," he said.

Trading volumes in the currency were heavier on Wednesday, reflecting a gradual increase in activity over the last few sessions, he added. "It was good flow, today. It's been picking up this week," the trader said.

Overall strength in the Canadian economy and the robust domestic stock market are attracting investment flows into the currency, he said. "There's definitely some real money, whether it's bond or equity related, coming into Canada," he said.

The Canadian dollar will likely continue to climb gradually higher, he added. "It just going to take its time."

Continued strength in prices for oil and other commodities are providing important support for the currency, analysts said.

"I think the general sense that oil prices are remaining strong is helping the currency," said Sal Guatieri, senior economist at the Bank of Montreal.

In cross-trading against major currencies, the Canadian dollar was at 73.41 yen and at C$1.4395 against the euro. The Canadian dollar was at A$1.0650 against the Australian dollar.-Reuters