Investing.com - The U.S. dollar rose to 11-year highs against its Canadian counterpart on Monday, as ongoing weakness in oil prices continued to weigh heavily on the Canadian currency, although lower expectations for a U.S. rate hike dampened demand for the greenback.
USD/CAD hit 1.3273 during early U.S. trade, the pair's highest since August 2004; the pair subsequently consolidated at 1.3267, gaining 0.60%.
The pair was likely to find support at 1.3057, Friday's low and resistance at 1.3344.
The commodity-linked Canadian dollar continued to suffer from the downward trend in oil prices. At the open of U.S. trading, crude oil futures for October delivery were down 5.19% at 38.37.
Meanwhile, investors remained cautious after data on Friday showed that manufacturing activity in China contracted at the fastest rate in six-and-a-half years in August, exacerbating fears over a slowdown in the world’s second-largest economy.
The preliminary reading of the Caixin China manufacturing purchasing managers' index came in at 47.1, down from July's final reading of 47.8.
It was the weakest level since March 2009 and was well below the 50 level separating expansion from contraction.
Financial markets have been roiled since China devalued the yuan on August 11, sparking a selloff in equities, commodities and emerging-market assets.
The greenback has come under pressure as mounting uncertainty over the global growth outlook and the subdued U.S. inflation outlook has prompted investors to push back expectations for an initial rate hike by the Federal Reserve.
The loonie was sharply lower against the euro, with EUR/CAD surging 3.09% to 1.5477.