Investing.com - The U.S. dollar rose to fresh six-week highs against its Canadian counterpart on Monday, as expectations for a U.S. rate hike in June continued to support the greenback, while declining oil prices dampened demand for the commodity-linked Canadian currency.
Trading volumes were expected to remain thin with Canadian markets closed for the Victoria Day holiday.
USD/CAD hit 1.3167 during early U.S. trade, the pair’s highest since April 7; the pair subsequently consolidated at 1.3168, advancing 0.40%.
The pair was likely to find support at 1.3006, the low of May 19 and resistance at 1.3219, the high of April 5.
The greenback remained broadly supported after the Federal Reserve’s April meeting minutes on Wednesday indicated that interest rates could rise as soon as June.
In a speech on Monday, San Francisco Fed President John Williams said he expects the U.S. central bank to increase rates two or three times this year, though he was concerned about the drop in inflation expectations.
The comments came after Boston Fed President Eric Rosengren said over the weekend that the U.S. was close to meeting most of the economic conditions necessary for the central bank to proceed with the tightening of monetary policy.
Meanwhile, the Canadian dollar weakened as oil prices moved sharply lower on Monday amid fresh concerns over a global supply glut.
The loonie was lower against the euro, with EUR/CAD edging up 0.12% to 1.4736.
Earlier Monday the preliminary reading of the euro zone composite purchasing managers’ index, which measures the combined output of both the manufacturing and service sectors, ticked down to a 16-month low of 52.9 from 53.0 in April. Economists had expected the index to rise to 53.2.
The report came after data showed that German private sector activity accelerated for the first time in 2016 in May, despite a slower rise in new business, while French private sector activity grew at the fastest pace in seven months in May.