Investing.com - The Canadian dollar fell to one-and-a-half week lows against its broadly stronger U.S. counterpart on Tuesday despite higher prices for oil, a major Canadian export, as hopes for a rate hike next month boosted the greenback.
USD/CAD hit highs of 1.3163, the most since February 9 and was last up 0.28% at 1.3140 as markets in the U.S. and Canada reopened after a long weekend.
The U.S. dollar was boosted after comments by a Federal Reserve official hinted a possible interest rate hike next month.
Cleveland Fed President Loretta Mester said late on Monday she would be “comfortable” raising interest rates at this point as inflation pressures pick up.
The comments came as investors were turning their attention to the minutes from the Fed’s January meeting, due to be released on Wednesday, for signals on the pace of rate hikes.
Last week Fed Chair Janet Yellen said a rate increase would be appropriate at one of the Fed’s forthcoming meetings.
The Fed has indicated that it could hike rates three times this year.
According to Investing.com's Fed Rate Monitor Tool less than 20% of traders expect the Fed to raise interest rates at its next meeting in March. The chance of a June increase is seen at slightly below 50%.
The Canadian dollar remained lower despite a sharp increase in oil prices on Tuesday after OPEC Secretary General Mohammed Barkindo estimated that OPEC members are around 90% in compliance with an output cut deal aimed at supporting the market.
Oil is one of Canada's major exports.