Loonie ends flat; focus on EU summit

Wed Dec 7, 2011 4:42pm EST
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By Claire Sibonney

TORONTO (Reuters) - The Canadian dollar ended Wednesday's session little changed against the U.S. dollar as investors held their bets due to uncertainty heading into Friday's European Union summit.

Pessimistic comments from Germany and new figures exposing deepening stress among Europe's banks dented financial market hopes of European leaders finding a turning point in the euro zone's debt crisis at the summit.

Still, the Toronto Stock Exchange, the Dow Jones industrial average and S&P 500, ended on firmer ground, signaling that some riskier positions were back on in choppy, holiday-thinned trade. .N .TO

"It's pretty much (flat) across quite a few currency pairs ... as for CAD, it's certainly just been treading water here," said Stewart Hall, senior currency strategist at RBC Capital Markets.

"Markets are caught between this negotiation process between the various EU members that is playing out across the wire services."

The Canadian dollar ended the North American session at C$1.0103 to the U.S. dollar, or 98.98 U.S. cents, down slightly from Tuesday's North American close at C$1.0096 against the U.S. dollar, or 99.05 U.S. cents.

The domestic currency's lackluster performance on Wednesday followed a sharp rally in the previous session that saw the commodity-driven currency outperform other majors after the Bank of Canada sounded less dovish than expected in its policy announcement.

Looking further out, the Canadian is expected to soften against its U.S. counterpart over the next several months, before recovering to current levels and rallying through parity in one year from now, according to a Reuters poll of global foreign exchange strategists.   Continued...