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Canada dollar up, but sustained upturn said unlikely

TORONTO: The Canadian dollar ended up on Wednesday after a push to take the US dollar higher against the Canadian unit ran out of steam and succumbed to profit-taking earlier in the session, market watchers said.

"Basically, we couldn't sustain the (US dollar) break above C$1.4650. I think the market was long a little bit, and they've sold off here for various reasons," said one New York currency trader with a major Canadian bank.

The Canadian dollar closed at C$1.4612 (68.44 US cents) on Wednesday after closing at C$1.4623 (68.39 US cents) in the previous session.

The Canadian dollar's bounceback is unlikely to prove sustained, and market players will likely try to take it back down to the C$1.4650 area on Thursday, the trader added.

Volumes were heavy early, but subsided markedly as the day progressed, he said.

News early in the session that retail sales climbed by 2.0 percent in December -- nearly doubling analysts' expectations -- did not have any sustained impact on the currency, market watchers said.

Bond-related cash flows may be a source of pressure on the Canadian unit in coming sessions, market watchers said. Government of Canada coupon and maturity payments totalling C$9.7 billion are scheduled for March 1, with another C$9.6 billion on March 15, according to Standard & Poor's MMS.

In cross-trading against major currencies, the Canadian dollar was at 76.10 yen and at C$1.4643 against the euro. The Canadian dollar was at A$1.1018 against the Australian dollar.

Canadian consumer price data for January will be released on Thursday. A consensus forecast prepared by Reuters calls for the all-items consumer price index to increase by 0.4 percent from the previous month, and by 2.8 percent on a year-over-year basis. Core inflation, which excludes the volatile food and energy sectors, is seen increasing by 1.8 percent year-over-year.-Reuters