The U.S. dollar fell to fresh one-month lows against its Canadian counterpart on Wednesday, as rising oil prices continued to boost demand for the Canadian currency, while uncertainty over the timing of the next U.S. rate hike still weighed on the greenback.
USD/CAD hit 1.2655 during early U.S. trade, the pair’s lowest since May 3; the pair subsequently consolidated at 1.2683, retreating 0.41%.
The pair was likely to find support at 1.2458, the low of May 3 and a 10-month low and resistance at 1.2840, Tuesday’s high.
Oil prices moved higher for a third consecutive session on Wednesday amid speculation weekly supply data due later in the session will show U.S. crude inventories fell at a faster pace than expected last week.
But the Canadian dollar’s gains were limited as Statistics Canada reported that building permits fell 0.3% in April, disappointing expectations for an increase of 1.5%. Building permits declined by 6.3% in March, whose figure was revised from a previously estimated 7.0% drop.
Data also showed that Canada’s housing starts rose by 188,600 units last month after an increase of 191,400 units in April, whose figure was revised down from a previously estimated gain of 191,500.
Analysts had expected housing starts to rise by 190,000 in May.
Meanwhile, the greenback remained under pressure since Federal Reserve Chair Janet Yellen indicated on Monday that the U.S. central bank won’t be raising interest rates until uncertainty over the economic outlook is resolved.
Yellen said she expects the economic recovery to continue but gave no indications on the timing of a next rate increase.
The loonie was fractionally higher against the euro, with EUR/CAD easing 0.08% to 1.4455.