TORONTO: The Canadian dollar finished about half a cent stronger against the greenback on Wednesday, recouping its losses from the previous session, but a dearth of market-driving news kept the currency range bound.
The currency surged to levels not seen since January last week, following better-than-forecast economic data and an optimistic tone from the Bank of Canada, and has been trading between C$1.2328 and C$1.2088 this week.
"I think right now the interest rate differentials is really driving USD/CAD. Because there's no movement there, we're not really getting any movement in the (currency) rate either," said Amo Sahota, director at Klarity FX in San Francisco.
The Canada-US two-year bond spread was 12.1 basis points, while the 10-year spread was -48.4. The two-year spread has remained relatively steady since last week's events.
"It's going to take some type of event to get us moving again. It's a pre-Fed week as well ... so that's keeping the market generally quiet as well," he said.
The Canadian dollar, which was outperforming most of its key currency counterparts, finished the session at C$1.2228 to the US dollar, or 81.78 US cents, stronger than the Bank of Canada's official close of C$1.2281, or 81.43 US cents on Monday.
Sahota noted that the USD/CAD was pivoting around the 100-day average.
One of the loonie's usual drivers, crude, was also not demonstrating any significant influencing trend, he added.
Prices were mixed on Wednesday, with Brent closing higher on renewed conflict in Yemen and US oil falling on higher inventory. The commodity is an important Canadian export.
Canadian government bond prices were mostly lower across the maturity curve, with the two-year price down 4.5 Canadian cents to yield 0.670 percent and the benchmark 10-year falling 53 Canadian cents to yield 1.498 percent.
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