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Forex - USD/CAD rises on dropping oil prices, caution before Fed

Published 09/20/2016, 09:27 AM
Updated 09/20/2016, 09:27 AM
© Reuters.  Greenback moves higher vs. loonie in early trade

© Reuters. Greenback moves higher vs. loonie in early trade

Investing.com - The U.S. dollar rose against its Canadian counterpart on Tuesday, as declining oil prices continued to weigh on the commodity-related Canadian currency, although downbeat U.S. housing sector data limited the greenback’s gains.

USD/CAD hit 1.3236 during early U.S. trade, the sesion high; the pair subsequently consolidated at 1.3237, gaining 0.26%.

The pair was likely to find support at 1.3133, Monday’s low and resistance at 1.3249, the high of September 16 and a nearly two-month high.

The Canadian dollar weakened as oil prices moved back lower on Tuesday after Venezuela said global crude supplies needed to decline by 10% in order to bring production down to consumption levels, sparking fresh supply glut concerns.

Crude prices had rallied on Monday after Venezuela said OPEC and non-OPEC producers were close to reaching an output stabilizing deal.

But sentiment on the greenback remained fragile after the U.S. Commerce Department said housing starts dropped 5.8% to 1.142 million units last month from July’s total of 1.212 million units. Analysts had expected a decline of 1.7% in August.

Meanwhile, the number of building permits issued declined 0.4% to 1.139 million units from 1.144 million. Economists had forecast a 2.5% rise to 1.170 million units in August.

Investors were also cautious ahead of the Federal Reserve’s monthly policy statement due on Wednesday, amid ongoing uncertainty over a possible rate hike.

The loonie was lower against the euro, with EUR/CAD rising 0.33% to 1.4802.

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