The Canadian dollar rose to its highest level since May 29 in morning trading Thursday but then ceded its gains to end flat after congressional testimony from Federal Reserve Chairman Ben Bernanke fell short of explicitly signaling a new round of monetary easing.
The U.S. dollar was at C$1.0281 late Thursday and C$1.0276 late Wednesday, according to data provider CQG. It dropped to a low of C$1.0206 before rebounding after Mr. Bernanke's remarks at 10:00 a.m. EDT (1400 GMT).
Appearing before the Joint Economic Committee, Mr. Bernanke suggested that questions about the needs, and effectiveness, of more Fed stimulus for the economy remain very much unresolved.
Some market players had positioned themselves for a more definite signal about the potential for more monetary stimulus in the chairman's remarks, and risk-sensitive assets such as the Canadian dollar sold off afterwards as a result.
"The market's all about immediacy, and I think there was some faint hope one might see something earlier rather than later on that front," said Shane Enright, executive director, capital markets trading at CIBC World Markets.
"I think the reality is that Bernanke is always going to be offering a slightly more balanced view," he said.
Crude oil futures retreated after an initial boost from news of a rate cut in China, a development that also pressured the Canadian dollar, Mr. Enright said.
The C$1.0200 area will provide initial support for the U.S. dollar, and sellers will likely return on a move to the C$1.0300-25 area, he said.
On Friday, Canadian jobs data for May will be released. Economists believe the Canadian economy created 5,000 jobs in May after adding 58,200 in the previous month.
These are the exchange rates at 4:23 p.m. EDT (2023 GMT) and 8:00 a.m. EDT (1200 GMT) Thursday, and late Wednesday.