The U.S. dollar pared gains against its Canadian counterpart on weekday, as higher oil costs season support to Canadian dollar, although trading volumes were expected to be thin with Canadian markets closed for Canada Day and ahead of Independence Day in the U.S. on Tuesday.
USD/CAD pulled back from 1.2995, the pair’s highest since Friday, to hit 1.2978 during early U.S. trade, still up 0.13%.
The pair was likely to find support at 1.2945, Friday’s low and a ten-month trough and resistance at 1.3014, Friday’s high.
The commodity-related Canadian dollar benefited from a continued rise in oil prices on Monday, after data last week pointed to a decline in U.S. output.
Meanwhile, sentiment on the greenback remained vulnerable amid growing expectations for tighter monetary policy from major central banks.
In comments last week the heads of the European Central Bank, the Bank of England and the Bank of Canada adopted a more hawkish view on monetary policy, indicating that they were getting ready to join the Federal Reserve in policy tightening.
Hawkish signals from foreign central banks contrasted with doubts over whether the Fed will be able to hike rates again this year given a recent batch of weak U.S. economic knowledge and growing skepticism that the Trump administration can be in a position to deliver on its pro-growth agenda.
The loonie was higher against the monetary unit, with EUR/CAD declining zero.47% to 1.4741.