TORONTO: The Canadian dollar was little changed against the greenback on Thursday after a speech by the head of the Bank of Canada offered little new insight on the path of monetary policy, allowing the currency to stick to its recent trading range.
The speech by central bank Governor Stephen Poloz had been a focal point for markets in an otherwise quiet session, with no major economic data on offer. Central bank policy has been a major driver of the loonie since the bank shifted to a more dovish stance last October.
The loonie showed little reaction after Poloz said he has become more hopeful about the recovery of the country's exports, though he cautioned that if exports do worse than expected, overall inflation will fall again and drift further from the bank's target.
Asked about the future direction of interest rates, Poloz said the central bank remains neutral on whether the next rate move will be up or down.
"Obviously he's concerned about the absence of inflation," said Gareth Sylvester, director at Klarity FX in San Francisco. "They want to see inflation get back to their 2 percent target so that their monetary policy tools are in their back pocket, but it's not really new news."
The Canadian dollar ended the North American session at C$1.1028 to the greenback, or 90.68 US cents, a tad stronger than Wednesday's close of C$1.1032, or 90.65 US cents.
After hitting a 4-1/2 year low hit in March, the loonie had bounced back but its rally has lost momentum over the last two weeks as investors weigh modestly improving economic data against a still-neutral Bank of Canada.
That has left the Canadian dollar moving mostly sideways in recent sessions as it hovers around the technically important C$1.10 level.
"Foreign exchange markets can do this from time to time. You'll see lots of volatility and then they'll fall into very narrow and tight ranges," Sylvester said.
A lack of liquidity during the recent Easter holidays may also have contributed to the sideways trading, he added.
Canadian government bond prices were mostly higher across the maturity curve, though the two-year was unchanged to yield 1.066 percent, while the benchmark 10-year was up 10 Canadian cents to yield 2.421 percent.
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