Investing.com - The U.S. dollar edged lower against its Canadian counterpart on Tuesday, as rising oil prices supported demand for the Canadian currency, although trading volumes remained light after Christmas and ahead of the New Year holiday.
Heading into the final week of the year, trading volumes are expected to remain light as many traders already closed books, reducing liquidity in the market which could result in exaggerated moves.
USD/CAD hit 1.3940 during early U.S. trade, the pair’s highest since December 22; the pair subsequently consolidated at 1.3885, down 0.13%.
The pair was likely to find support at 1.3812, Monday’s low and resistance at 1.3967, the high of December 22.
Investors continued to focus on the current oil rout amid ongoing concerns over a global supply glut and the lack of demand.
The commodity-related Canadian dollar found support as crude oil futures for February delivery jumped 2.12% to $37.59 in early U.S. trading, off the 11-year low of $35.98 hit on December 22.
Meanwhile, market participants were still eyeing a report on U.S. consumer confidence due later in the day after mixed U.S. economic reports released last week failed to offer clues as to how fast the U.S. central bank will raise interest rates next year.
With the first U.S. rate hike since 2006 out of the way, investors are now focusing on the pace of future rate increases.
Earlier Tuesday, the U.S. Bureau of Economic Anaysis reported that the goods trade deficit widened to $60.50 billion last month from $58.41 billion in October. Analysts had expected the trade deficit to widen to $60.90 billion in November.
The loonie was higher against the euro, with EUR/CAD declining 0.57% to 1.5165.