Investing.com - The Canadian dollar strengthened against its U.S. counterpart on Tuesday as oil prices rose and traders awaited comments later in the day by U.S. Federal Reserve Chair Janet Yellen.
USD/CAD was down 0.31% at 1.3201 by 09.30 ET and was trading in a range of $1.3198 and $1.3261.
Prices of oil, one of Canada's major exports, rose for a fourth straight session on Tuesday, pulling further away from last week’s seven-month lows despite concerns that rising U.S. output is threatening to derail efforts by other major producers to reduce a global supply glut.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.69% at 96.43, pressured lower by the stronger euro.
The euro surged after European Central Bank President Mario Draghi said earlier that factors weighing on inflation in the euro zone were mainly temporary and the bank could look through them.
Investors were looking ahead to comments from Fed Chair Yellen later Tuesday for fresh indications on the future path of interest rates.
Traders were waiting to see if Yellen would maintain a positive outlook on the U.S. economy despite a recent batch of weak economic reports, which would support the Fed’s projection for one more rate hike this year and three rate hikes next year.
Recent weakness in economic data has raised questions over the Fed’s plans to tighten monetary policy, with investors now expecting that the pace of its tightening could be much slower than policymakers want.