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Canadian $

closes firmer

TORONTO: The Canadian dollar closed firmer but still trapped in its range despite late session buying against the German mark, dealers said.

Little change is forecast overnight, although dealers say that a weakening trend is set to develop from jitters about an upcoming referendum on Quebec separation from Canada as well as concern about another cut in the call loan rate by the Bank of Canada.

"If they do ease again, as some are expecting, it could cause a sell-off but for the time being we're doing very well given that the referendum is on the horizon," one dealer said.

The Bank of Canada's current target range for call is 6.25/6.75 percent.

But the dealer warned that pre-referendum jitters a date is expected within 15 days could push the Canada out of the summer doldrums up to C$1.3700 although other Canada watchers are forecasting much weaker levels of C$1.4000.

Dealers said the Canadian currency continues to trade on its own merits, only sporadically trading in line with the US dollar. Referendum nervousness could explain Canada's failure to match recent US dollar strength, although dealers noted the Canadian dollar continues to gain on the crosses.

The Canadian dollar closed at C$1.3565 (US$0.7369) compared to C$1.3586 (US$0.7360) at Monday's closed. On the crosses, the Canadian dollar was up at 1.0968 marks from 1.0870 marks Monday and gained to 71.48 yen at 71.24 yen.

The Bank of Canada rate fell to 6.70 percent from 6.82 percent in the weekly government auction.-Reuter