August 20, 2012 / 8:43 PM / 6 years ago

C$ ekes minor gains ahead of event risks

TORONTO (Reuters) - The Canadian dollar ticked moderately higher against the U.S. dollar on Monday, but with volumes light, the market remained mostly in a holding pattern ahead of key data and policy news later in the week and beyond.

The new Canadian 20 dollar bill made of polymer is displayed at the Bank of Canada in Ottawa May 2, 2012. REUTERS/Chris Wattie

“There’s a lot of tier-one event risks that have the ability to push the markets around fairly significantly, so the market does take a breather from time to time. Today is one of those days,” said Jack Spitz, managing director of foreign exchange at National Bank Financial, noting there was little in terms of volume in the market or trading range on funds and most currency pairs.

Canada’s dollar closed at C$0.9884 versus the greenback, or $1.0117, slightly firmer than Friday’s close at C$0.9891 to the U.S. dollar, or $1.0110.

“There’s a fairly sideways but slow grind to the left, toward the next level of important support in USD/CAD which is at the calendar low of C$0.98,” said Spitz.

Wednesday’s Canadian retail sales data, comments from Bank of Canada’s Mark Carney when he speaks to the Canadian Auto Workers union and the Federal Reserve’s FOMC minutes could all be factors in the currency’s direction. Market watchers will look closely for any change in the Canadian central bank’s hawkish tone.

Fed Chairman Ben Bernanke’s speech in Jackson Hole, Wyoming, on August 31 will kick off the market-moving “tier-one” events. On the domestic front, all eyes will also be on the Bank of Canada policy decision and the Quebec election.

“There’s a veritable plethora of market risks and economic news and policy decision that are going to be made that are going to be of great influence to the markets,” said Spitz.

Canadian bond prices were mixed. The two-year bond was up 0.5 Canadian cents, yielding 1.192 percent, and the benchmark 10-year bond rose 4.5 Canadian cents, yielding 1.941 percent.

Editing by Phil Berlowitz

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