Published: Wed, 22 Apr 2009 16:24:04 +0200

Relatively Quiet Day for Canadian Dollar Ahead of Thursday BOC MPR

(CEP News) - It's a relatively quiet day for the Canadian dollar as it shows modest moves against the U.S. dollar following a negative open to the North American session Wednesday.

USD/CAD has traded in a fairly tight range through most of the overnight session. Ahead of the open the cross hit a high of 1.2476 CAD. However, the U.S. dollar was unable to hold its gains and the cross is under significant pressure trading below 1.2350 CAD.

Minor Canadian data is not having much impact on the loonie. Statistics Canada reported the seventh consecutive drop in the composite leading indicators. The report showed a drop of 1.3%, worse than the consensus forecast for a 0.8% decline.

According to currency strategists, Canadian dollar moves could be light today ahead of Thursday's Bank of Canada (BOC)Monetary Policy Report (MPR).

On Tuesday, after cutting interest rates to 0.25%, the Bank of Canada said in its statement they would release the framework for quantitative easing in the MPR.

Stephen Gallo, head of market analysis at Schneider FX, said he has favoured a short USD/CAD position in the last few days. However, he added he is not expecting the Canadian dollar to make further gains ahead of the BOC report.

Shaun Osborne, chief currency strategist from TD Securities said he is relatively neutral on the Canadian dollar as it hovers in the middle of the broader range. However, he said the expectations that the BOC will embark on quantitative easing are slightly overblown.

"I don't think the bank is in any hurry to steps for quantitative easing," he said.

Currency strategists from CIBC are also neutral regarding short term Canadian dollar moves. They pointed out USD/CAD remains range-bound.

"(We) prefer to be sidelined at current neutral levels, looking to rebuild USD longs towards 1.2200, or shorts towards 1.2800," they said in a research note.

Euro/USD up 0.76 cents to 1.3022

USD/CAD down 0.06 cents to 1.2352

USD/Yen down 0.67 points to 98.07

GBP/USD down 1.61 cents to 1.4512

AUD/USD down 0.32 cents to 0.7083

Euro/Yen down 0.08 points to 127.71

Euro/GBP up 1.54 pence to 0.8974

GBP/CAD down 2.12 cents to 1.7922

CAD/Yen down 0.50 points to 79.40

Euro/CAD up 0.88 cents to 1.6085

The U.S. Dollar Index is down 0.31 points to 86.24

All data taken at 10:20 a.m. EDT.

By Neils Christensen, neilsc@economicnews.ca, edited by Megan Ainscow, mainscow@economicnews.ca