Investing.com - The U.S. dollar pared gains against its Canadian counterpart on Friday, as surging oil prices boosted demand for the commodity-related Canadian currency, although disappointing data from Canada limited its gains.
USD/CAD pulled away from 1.3388, the pair’s highest since January 4, to hit 1.3347 during early U.S. trade, still up 0.21%.
The pair was likely to find support at 1.3250, Thursday’s low and resistance at 1.3423, the high of December 19.
The Canadian dollar found some support as oil prices continued to climb on Friday, a day after the International Energy Agency said that world oil markets are slowly tightening as demand rises.
In its monthly oil market report, the IEA said output cuts announced by the Organization of the Petroleum Exporting Countries and 11 non-OPEC producers in November had "entered their probation period".
But gains were capped as Statistics Canada reported on Friday that retail sales rose 0.2% in November, disappointing expectations for a 0.5% advance.
Core retail sales, which exclude automobiles, inched up 0.1% in November, after a 1.4% gain the previous month and compared to expectations for a 0.2% rise.
A separate report showed that Canada’s consumer price index dropped 0.2% in December, compared to forecasts for a 0.1% decline and after a 0.4% slide in November.
Year-on-year, consumer prices gained 1.5% last month, confounding expectations for a 1.7% rise.
Core CPI, which excludes food and energy, fell by 0.3% in December, more than the expected 0.2% slip.
Meanwhile, investors were focusing on Donald Trump’s inauguration ceremony, scheduled later in the day, amid sustained uncertainty over the new U.S. administration’s fiscal and economic policies.
The greenback found support late Thursday when Federal Reserve Chair Janet Yellen said the central bank should continue to raise interest rates, but slowly.
Speaking at a conference in San Francisco, Yellen said that "allowing the economy to run markedly and persistently ‘hot’ would be risky and unwise," before adding: "I consider it prudent to adjust the stance of monetary policy gradually over time."
The loonie was lower against the euro, with EUR/CAD edging up 0.23% to 1.4235.