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IMM currencies close

mostly higher

CHICAGO: IMM currency futures closed mostly higher on Monday, as Canadian dollar contracts sharpened their bullish trend despite the Bank of Canada's decision to lower rates.

The Bank of Canada cut its target range for the call loan rate to 6.00-6.50 percent on signs economic growth north of the US border remained slow.

Although the central bank's decision precipitated several banks to cut their prime rate by 50 basis points, the September Canadian dollar surged through the previous contract high of $0.7442 and rallied near key resistance at $0.7475.

"The market was looking for the Bank of Canada to lower rates," said Brian Garvey, an economist with IDEA, Inc. "And expectations that this is perhaps the last drop in rates fed the momentum."

September Canadian dollars broke through the 1994 high of $0.7438 last Thursday and set a contract high of $0.7442 on Friday.

Traders noted Friday's total open interest for Canadian dollar futures grew by about 20 percent to over 52,446 contracts.

Total volume for the currency was 17,301 contracts.

Garvey said several US investment houses were good buyers of Canadian dollar futures on ideas Japan will increase purchases of Canadian bonds, as well as results of a poll that showed Quebeckers are almost evenly split on the question of sovereignty.

September Canadian dollars rose to $0.7472, through the $0.7460 resistance level and near the key technical level of $0.7275, or 1.3333 spot.

The put-to-call ratio continued to show an increase in Canadian dollar calls, as the market priced in a defeat in the Quebec government's referendum on sovereignty in October.

Marks and Swiss francs ended off session peaks, while yen held marginal gains.

At the end of pit trade, September yen was up $0.000001 at $0.010370, marks were up $0.0035 at $0.6834, Swiss francs were $0.0036 higher at $0.8302, pounds were up $0.0026 at $1.5492, Canadian dlrs were up $0.0039 at $0.7469 and Australian dlrs were off $0.0006 at $0.7428.-Reuter