20000304

Canada dollar ends lower after "wild day" of trading

TORONTO: The Canadian dollar ended sharply lower on Thursday but up somewhat from its earlier lows after a volatile session dominated by offshore interest in buying the US dollar.

"It was a wild day in the Canadian currency right from the get go," said Bill Mooney, chief foreign exchange dealer with Societe Generale in Montreal. "There was massive interest offshore to buy (US) dollars today."

The Canadian dollar closed at C$1.4557 (68.70 US cents) on Thursday after closing at C$1.4484 (68.04 US cents) in the previous session.

An initial burst of US dollar buying against the Canadian dollar pushed the currency lower earlier in the session, forcing it through the C$1.4500 by just after 8 a.m. (1300 GMT).

That interest persisted, with one London-based player handing a large buy US dollar order over to its North American counterpart, Mooney said.

It was difficult to isolate the cause of the US dollar buying interest on Thursday, market watchers said.

"I don't know what's driving it, exactly, but we've seen a lot of dollar-buying interest from Europe and the United States," Mooney said.

The flows may have been related to merger and acquisition activity, and also could have reflected the effects of heavy Canadian bond maturities and coupon payments this month, he said.

Cross trading activity may have been another source of pressure on the Canadian unit, Mooney said.

One Canadian currency market source said some cross selling of the Australian dollar against the Canadian unit -- put through earlier in the week when that currency was tumbling -- was unwound on Thursday.

"I don't think I could pin it down to any factor today to be honest with you," he said.

The prospects for the wayward currency could be poised to brighten from its current low levels, Mooney added. "From here, I still think that Canada is looking very attractive, and we're recommending that if Canada gets any weaker, from a corporate perspective, they should like getting into it," he said.

Despite Thursday's volatile movements, the currency still remains well within its recent big range of C$1.4450 to C$1.4650, he said.

In cross-trading against major currencies, the Canadian dollar was at 73.93 yen and at C$1.4059 against the euro. The Canadian dollar was at A$1.1305 against the Australian dollar.-Reuters