Investing.com - The Canadian dollar edged lower against its U.S. counterpart on Tuesday, as lower prices for oil, a major Canadian export weighed.
USD/CAD was at 1.2483 by 09.30 ET, holding above the two-year low of 1.2412 hit on July 26. The pair traded in a range of 1.2473 to 1.2513.
Lower prices for oil pressured the Canadian dollar. Oil prices turned lower ahead of inventory data amid ongoing concerns about the oversupplied global market.
But the loonie’s losses were held in check amid expectations for higher interest rates.
The Bank of Canada raised rates for the first time in seven years last month and indicated that it may do so again in the coming months.
The BoC is widely expected to keep rates on hold at its next meeting in September but could lay the groundwork for another hike in October.
The greenback remained on the back foot amid deepening political turmoil in Washington and diminished expectations for a third rate hike by the Federal Reserve this year.
The subdued inflation outlook has raised doubts over whether the Fed will be able to stick to its planned tightening path.
The dollar had been supported by the Fed's gradual policy tightening since late 2015 but the prospect that other major central banks may join it in tightening monetary policy has fed into recent dollar weakness.
Fading hopes for tax reforms and fiscal stimulus under the turbulent Trump administration have also weighed on the dollar.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 92.77 after falling as low as 92.64 on Monday, the weakest since May 2016.
The index fell 2.88% in July, its fifth straight monthly decline and its largest monthly percentage decline since March 2016.