The U.S. dollar edged lower against its Canadian counterpart on Monday, as market sentiment mildy improved in thin holiday trade, although demand for the greenback remained supported by the Federal Reserve''s recent decision to taper its stimulus program.
USD/CAD hit 1.0689 during early U.S. trade, the session low; the pair subsequently consolidated at 1.0692, slipping 0.15%.
The pair was likely to find support at 1.0619, Friday''s low and resistance at 1.0737, the high of December 20 and a three-and-a-half year high.
Risk-related assets received a boost after European Central Bank Governing Council member Jens Weidmann on Friday said keeping interest rates low may endanger political reforms.
According to Germany’s Bild newspaper, Weidmann said low inflation shouldn’t be used to justify loose monetary policy. "We must take care to raise interest rates again in a timely manner should inflation pressures build," he reportedly added.
Meanwhile, the greenback still found support amid expectations of further stimulus tapering by the Fed. The U.S. central bank will start reducing its bond-buying stimulus program by USD10 billion a month in January, amid indications of an improving U.S. economy.
The loonie was lower against the euro, with EUR/CAD adding 0.19% to 1.4747.
Also Monday, Italy’s Treasury sold EUR3 billion worth of ten-year debt at an average yield of 4.11%, up from 4.01% at a similar auction last month. The yield on Italian 10-year bonds stood at 4.163% following the auction.
Later in the day, the U.S. was to release industry data on pending home sales.
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