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Canada dollar ends up slightly after choppy session

TORONTO: The Canadian dollar ended slightly up on Wednesday after a choppy session that saw the currency buoyed higher and then dragged lower as waves of volatility swept global currency markets.

The Canadian dollar closed at C$1.4484 (69.04 US cents) on Wednesday after closing at C$1.4496 (68.98 US cents) in the previous session.

It slipped to the C$1.4530 area in Asian trading, but climbed in Europe, reaching a pinnacle of C$1.4442 before weakening off as the North American session progressed and profit taking set in.

Some market players said the plummeting Australian dollar -- pushed to its lowest level since December 1998 by weak retail sales data -- bolstered the Canadian unit in early trading.

The yen's 2.75 percent surge against the US dollar was one of the factors helping curtail the Canadian unit's gains, some market watchers said.

"The yen situation obviously puts a lot of pressure on bond markets, stock markets and whatever else, and people basically don't like that in terms of Canada, especially with the spreads we've got," said David Ebata, senior Canadian markets analyst.

The rapid movements in the Canadian dollar were accentuated by its break through some significant levels, he added.

"It blew through some levels and we saw some major stop losses being triggered," Ebata said. "I think it was a tough day for traders."

The Canadian dollar's inability to hold its gains despite the recent strong economic data in Canada and the US does not augur well for the currency, some market watchers said.

Strong US data on Wednesday may have weighed on the Canadian dollar by inciting fears about aggressive interest rate tightening in the US, said Sal Guatieri, senior economist with the Bank of Montreal.

On the positive side, domestic economic strength will remain supportive, he said.

"The fundamentals are really very positive for the Canadian dollar," Guatieri said.

Volumes in the currency were "reasonably heavy" on Wednesday, one trader said.

In cross-trading against major currencies, the Canadian dollar was at 73.93 yen and at C$1.4105 against the euro. The Canadian dollar was at A$1.1395 against the Australian dollar.-Reuters