the movement of the hand is determined by the movement of the horses head and neck.
in the case of a horse that is supple through it's back, working from behind and is soft in the poll and jaw - the movement is actually fairly limited - and just by keeping the arm soft with no resistance, the hand will follow automatically.
however, not many school horses will canter in the above way automatically - it is hard to follow the stiff and jolting head and neck movements of a horse who is already itself stiff and tense in the back, neck and jaw. To achieve a feeling of stillness when the horse is as such, requires asking for softness - in much the same way as one would in trot, so that you can be soft and elastic in contact with the horses mouth.
as with other paces, that elusive feeling of stillness and softness is really only achieved through movement - which is at the suggestion of the horse.
the horse shouldn't be distinctly shortening in the neck at each stride - if that is happening it suggests to me that the rider is not elastic enough in the contact. It is easy to forget that the horses nose does naturally come in front of the vertical for moments in the canter.
I know it's poor quality, but this video of a dressage lesson I had a while back illustrates a horse who is soft in the canter and the amount of movement you would wish to see from the horses head and neck - and my hand (hopefully!) following the movement most the time... http://www.youtube.com/watch?v=122CV0MEMMI