Published: Tue, 10 Feb 2009 16:35:49 +0100

Canadian Dollar Remains Range Bound Following BOC Governor Carney's Speech

According to FX strategists, markets weren't surprised at hints that the central bank could embark on quantitative easing measures.

Despite a weaker January employment report, the Canadian dollar has managed to hold on to some gains across the board. The USD/CAD is struggling to make a break above 1.23 CAD and the EUR/CAD is unable to hold gains above 1.61 CAD. This morning, the USD/CAD is up half a cent to 1.2225 CAD and the EUR/CAD is up 0.74 cents to 1.5900 CAD.

"I am surprised the Canadian dollar hasn't weakened off more than it has," said Steve Butler, director of FX trading at the Bank of Nova Scotia. "I think it shows that there is still a lot of optimism that the Canadian economy will be one of the first to recover."

Butler is expecting the USD/CAD to continue to trade within its broader range between 1.18 and 1.27/1.28.

"The market has no direction," he said. "There is a lot of fear over what is going to happen next and that is keeping markets contained."

Jon Gencher, currency strategist at BMO Capital Markets, is bullish on the Canadian dollar and expects that it will do well in the medium term.

"It's not that I think Canada is going to do extremely well it's just that I think other economies are going to remain weak," he said. "I just see more risk in other countries."

Looking at technical levels, Jacqui Douglas, currency strategist at TD Securities, said the 1.22 CAD level is going to hold as support, while the 1.23 CAD level is going to hold as resistance.

The Canadian dollar was down 0.0021 to 0.8193 against the U.S. dollar.

The euro was up 0.0083 to 1.5913 against the Canadian dollar.

The Canadian dollar was down 0.380 points to 74.7425 against the yen.

The pound sterling was down 0.0114 to 1.8023 against the Canadian dollar.

The Canadian dollar was up 0.0110 to 1.2216 against the Australian dollar.

All data taken at 10:34 a.m EST.

By Neils Christensen, neilsc@economicnews.ca, edited by Sarah Sussman, ssussman@economicnews.ca

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