Investing.com - The U.S. dollar was steady at five-and-a-half month highs against the dollar on Tuesday, boosted by expectations for a shift in the Bank of Canada’s monetary policy stance after robust inflation data last week.
USD/CAD touched 1.0716, the lowest since January 7 and was last at 1.0730, flat for the day.
The pair is likely to find support at 1.0600 and resistance at 1.0825, Friday’s high.
Statistics Canada reported Friday that the annual rate of inflation rose to 2.3% in May. It was the first time in more than two years that the annual inflation rate exceeded the BoC’s 2% target, fuelling optimism over the economic recovery.
The BoC kept its benchmark interest rate on hold at 1% earlier this month, reiterating concerns that low inflation and weak exports are acting as a drag on growth.
A separate report on Friday, showing that Canadian retail sales rose much more strongly than expected in April, also provided lingering support.
Elsewhere Tuesday, EUR/CAD eased up 0.115 to 1.4614, recovering from the five-and-a-half month trough of 1.4555 set on Monday.
The common currency shrugged off data showing that German business confidence deteriorated this month, amid concerns about the impact of crises in Iraq and Ukraine.
The German Ifo business climate index fell to a six-month low of 109.7 this month from 110.4 in May and compared to estimates of 110.3.