Canadian dollar gains fade versus yen

The Canadian dollar finished little changed against the greenback on Friday, and the early gains it made against the yen on G7 central bank intervention faded a bit as the session wore on. The currency took tame domestic inflation data in stride, and attracted only muted attention for most of the day.
Traders were focused instead on the move by Group of Seven central banks, including the Bank of Canada, to sell the yen, which had risen to record highs against some currencies due to anxiety over the crisis in quake-ravaged Japan. The Bank of Canada's participation will be reflected in the country's foreign reserves report in early April, a central bank spokesman said.
The Canadian dollar had weakened against the yen, with one Canadian dollar buying as little as 78.03 yen on Thursday, a level not seen since April 2009. It jumped as high as 83.34 yen immediately after the Bank of Canada confirmed it was intervening, but by session's end, had eased to around 81.85 yen. "Canada has been lackluster today all day in a really tight range," said Firas Askari, head of foreign exchange trading at BMO Capital Markets. "Canada/yen has come off just because dollar/yen has come off."
The US dollar made sharp gains after the G7 action but later fell back. Analysts said it was not important how much the G7 central banks may have spent but the show of unity was the point. TD Securities noted that Canada's yen reserves are relatively small, $252 million as of March 3, and that any movement in the yen versus the Canadian unit is more likely to be dictated by US Federal Reserve action than by that of the Canadian central bank.
"The holdings of reserves that the (Bank of Canada) has of Japanese yen are fairly small so I think this is to provide moral support and to underpin the consensus across the G7 to support Japan," said David Tulk, chief Canada macro strategist at TD Securities.
The Canadian currency had a lackluster session against the US currency, finishing at C$0.9861 to the US dollar, or $1.0141, little changed from Thursday's North American session close at C$0.9863 to the US dollar, or $1.0139. It finished a volatile week - during which it fell more than 2-1/2 cents to hit its weakest point since February 11 - down 1.5 percent.