Canada Afternoon: C$ Up Modestly In Calmer Market

Canada Afternoon: C$ Up Modestly In Calmer Market
TORONTO (Dow Jones)--The Canadian dollar ended modestly higher Friday as a calmer market environment with less emphasis on risk aversion or appetite enabled the currency to avoid volatile trading. The U.S. dollar was trading at C$1.0523 at 3:53 p.m. EDT (1953 GMT), from C$1.0502 at 8:00 a.m. EDT (1200 GMT), and from C$1.0552 late Thursday. It dropped to a low of C$1.0495 in European trading, but bounced back to a relatively narrow trading bracket around the C$1.0520 mark in subsequent trading. "I still think the pair is very happy to stay within a C$1.0500 to C$1.0700 range," said Dustin Reid, currency strategist at ABN Amro in Chicago. Bond markets were mixed and stock markets didn't show sharp moves, resulting in a quieter day than recent sessions, where there has either been a pronounced increase in risk aversion, boosting the U.S. dollar against its Canadian counterpart, or a jump in risk appetite, driving the Canadian dollar higher at the expense of the greenback, Reid said. There were no significant data releases in Canada on Friday. The U.S. dollar could gain ground against its Canadian counterpart next week if the pressure on equity markets intensifies again, Reid said. Equity markets could see selling pressure as month-end redemptions from investment funds occur later in the week, and as equity investors shy away from carrying long positions into the Labor Day holiday weekend, he said. "From that perspective, I think dollar/Canada is probably bid, probably looking to kind of bounce off the bottom of the range at C$1.0500, and probably head back up to C$1.0700," he said. It will likely take a major development to kick the U.S. dollar out of that 200-point range, including a surprise rate movement or announcement from the Bank of Canada, unexpected fundamental data, including the second-quarter gross domestic product data scheduled for release in Canada on Aug. 31, or another major development in terms of global risk aversion, he said. With market players becoming acclimatized to bad news in the U.S. subprime-mortgage sector and in credit markets generally, it might take substantially worse news to trigger significant moves in the currency pair, he said. "It's going to take something extremely shocking to move markets in general," Reid said. ABN Amro has joined other market forecasters in revising its forecast of monetary policy, and is now expecting the bank to hold interest rates steady at its next policy announcement date on Sept 5, rather than raising them. That expectation is essentially priced into the Canadian dollar, he said. On Monday, Speech by Deputy Governor of the Bank of Canada Pierre Duguay Deputy Governor at the Bank of Canada, will speak at the Canadian Association for Business Economics Summer Outlook Conference on the topic "The Bank of Canada's Research Agenda and the Future of Inflation Targeting." Duguay will speak at 7:45 p.m. EST, at which the text of his speech will be released. No media activities are scheduled. These are the exchange rates at 3:53 p.m. EDT (1953 GMT), 8:00 a.m. EDT (1200 GMT), and late Thursday. USD/CAD 1.0523 1.0502 1.0552 EUR/CAD 1.4380 1.4314 1.4312 CAD/JPY