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Canada dollar ends up slightly ahead of Fed meeting

TORONTO: The Canadian dollar ended moderately higher on Monday as market players began their countdown for results of the US Federal Reserve's policy-setting meeting on Tuesday.

The Canadian dollar closed at C$1.4691 (68.07 US cents) on Monday versus C$1.4715 (67.96 US cents) at the previous session's close.

"It's status quo on the range until we see the Fed make their move tomorrow," said Jack Spitz, regional manager of foreign exchange with the National Bank of Canada in Toronto.

"It's pretty quiet. It's been a tight range," he added.

While the Canadian dollar remained confined to a tight range on Monday, there was interest in both buying and selling the currency, Spitz said.

"We've seen good, two-way flows, believe it or not, on both sides of the equation," he said.

Both domestic and nondomestic accounts were participating in the market for the currency on Monday, he added.

The Canadian currency slipped markedly lower last Thursday, with much of the pressure stemming from concern about the ultimate political fate of Canada's respected finance minister, Paul Martin.

A convention of the governing Liberal Party over the weekend accentuated concern that Martin, widely thought to be interested in the role of prime minister, might leave politics if Prime Minister Jean Chretien insisted on leading the Liberals into the next federal election.

While Chretien reaffirmed his intention to run again, Martin also said he planned to run in the next election, expected sometime next year.

The concerns over Martin's possible departure have been fully discounted by the currency, and the currency may be poised to start improving once the Fed meeting is finished, Spitz said.

"That's now priced in. The Fed move of 25 basis points is priced in, the Bank of Canada's match of 25 basis points is priced in, so we've got nowhere to go but up," he said.

"The fundamentals are still good for this country. As long as asset markets behave themselves, I still think we have the ability to see Canada rally," he added.

Any improvement in the currency would likely be confined to a move to the top of its recent broad range of C$1.4400 to C$1.4700, he said.

In cross-trading against major currencies, the Canadian dollar was at 72.41 yen and at C$1.4286 against the euro. The Canadian dollar was at A$1.1184 against the Australian dollar. -Reuters