US dollar advanced to session highs versus its Canadian peer on Tuesday, as uncertainty over the timing of Federal Reserves Quantitative Easing scale back continued, while investors remained wary.
USD/CAD reached a session high at 1.0401 at 12:32 GMT, the pairs highest since August 8th, after which consolidation followed at 1.0393. Support was likely to be received at August 19th low, 1.0314, while resistance was to be encountered at August 8th high, 1.0429.
Market players were focusing on the release of the minutes of Federal Reserve Bank’s July meeting, scheduled on Wednesday, as it may provide clues on when the central bank may begin tapering its easing program. Fed policymakers will probably begin to pare back the central bank’s bond-buying program in September, as this triggered selling pressure on shares worldwide today. Expectations of such action by Fed were also strengthened after on August 15th a report said that the weekly initial jobless claims in the United States decreased in number to their lowest in almost six years.
Meanwhile, Canadian dollar retreated against the majority of its major peers, as the central banks of Canadas export partners, Australia and New Zealand, signaled steps could be taken to reduce the value of their currencies. “There’s a bit of a drag from the Aussie and the kiwi performance overnight,” said Shaun Osborne, chief currency strategist at Toronto-Dominion Bank, by phone from Toronto, cited by Bloomberg. “The Canadian dollar has just been dragged lower by the performance of those currencies, just falling in sympathy.”
Additionally, a report said earlier on Tuesday that Canadian wholesale sales dropped by 2.8% in June on a monthly basis, after the 2.2% increase in May, while experts had anticipated a smaller drop in sales, by 0.5%.
Elsewhere, the loonie, as Canadian currency is also known, was significantly losing ground against the euro, with EUR/CAD cross soaring 1.25% for the day to trade at 1.3972 at 13:53 GMT. GBP/CAD pair was also gaining on a daily basis, up by 0.68% to trade at 1.6303 at 13:54 GMT.
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