CANADA FX DEBT-C$ ends lower after hitting 7-month high

Wed May 27, 2009 4:59pm EDT
 
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* C$ breaches 90 U.S. cent level before paring gains

* Month-end positioning blamed for retracement

* Bond prices knocked lower across curve (Updates to session close)

By Frank Pingue

TORONTO, May 27 (Reuters) - The Canadian dollar fell versus the greenback on Wednesday as its brief climb above 90 U.S. cents during the session convinced some traders to reassess their positions heading into the end of the month.

The Canadian dollar rallied to its highest level since early October around midday, but late in the session it turned lower and relinquished a chunk of the sharp gains recorded in recent months.

"A little bit of a wobble at the end of the session," said Steve Butler, director of foreign exchange trading at Scotia Capital. "I think the market, getting into month-end, is just a little bit nervous about being too short U.S. dollars."

When the Canadian currency hit its session high of C$1.1098 to the U.S. dollar, or 90.11 U.S. cents, it marked a climb of more than 17 percent from the four-year low below 80 U.S. cents that it fell to in early March.

But the Canadian dollar could not hold on to the gains and ended the session at C$1.1195 to the U.S. dollar, or 89.33 U.S. cents, down from C$1.1178 to the U.S. dollar, or 89.46 U.S. cents, at Tuesday's close.   Continued...