Gains in oil prices helped strengthen the Canadian dollar against the U.S. dollar on Tuesday ahead of comments from U.S. Fed Chair Janet Yellen expected later in the day. Investors are waiting to dissect comments to judge the likelihood of another interest rate hike in 2017.
USD/CAD slipped 0.33% in early morning trade to trade at 1.3199.
Oil, a major Canadian export, rose for the fourth straight session, helping boost oil prices off of a seven-month low. Market concerns over U.S. oil output is still holding investors back amid fears that increased output may lead to erasing efforts from major oil producers to lower inventory stockpiles.
The euro is also up on Tuesday following comments from European Central Bank president Mario Draghi. The president’s comments suggest that the ECB is open to reducing the emergency stimulus program that was implemented to help strengthen the eurozone economy.
The comments increased investor sentiment that the euro zone is rebounding and the economy is improving. The comments sent the euro up 1% in early morning trade. Draghi suggests that monetary support is needed to help force policy changes and warns that a reduction in support will be gradual.
Draghi also noted that the ECB is willing to look at factors that may be holding back price growth.
The U.S. dollar index is down 0.61% against a basket of other major currencies, with EUR/USD advancing 0.85%, GBP/USD advancing 0.38% and AUD/USD remaining flat. The greenback has advanced against the Japanese yen, with the USD/JPY rising 0.18%.
Federal Reserve officials have hinted that a potential rate hike could happen in December 2017 if inflation remains on its current trajectory.
Weak U.S. economic data weighed on investors to start the week and will be the focal point of discussion following Yellen’s comments later in the day. The Fed has been willing to normalize its policy in recent months despite lower-than-expected economic reports.