Investing.com - The U.S. dollar was higher against its Canadian counterpart on Tuesday, but remained within close distance to the previous session’s four-month trough as stronger oil prices lent support to the Canadian currency.
USD/CAD hit 1.3359 during early U.S. trade, the session high; the pair subsequently consolidated at 1.3365, gaining 0.64%.
The pair was likely to find support at 1.3242, the low of November 19 and resistance at 1.3472, Friday’s high.
Market sentiment weakened after official data earlier showed that China’s exports tumbled 25.4% from a year earlier to $126.1 billion in February. Economists had expected a decline of 12.5%.
Imports fell 13.8% year-on-year, slowing from January’s 18.8% tumble.
The steep fall in exports was due in part to the Chinese New Year, which fell earlier in February this year, but still highlighted concerns over slowing global demand.
But the commodity-related Canadian dollar remained supported as oil prices moved above $38 a barrel on Monday amid ongoing hopes for production cuts.
Separately, data showed that Canada’s building permits declined by 9.8% in January, compared to expectations for a 2.5% fall. Building permits rose 7.7% in December, whose figure was revised from a previously estimated 11.3% increase.
Another report showed that housing starts in Canada rose to 212,600 units in February from 165,100 units in January, whose figure was revised from a previously estimated 22,200 units. Analysts had expected housing starts to rise to 180,000 units last month.
Meanwhile, sentiment on the greenback remained fragile after Federal Reserve Governor Lael Brainard dampened expectations for a short term rate hike, saying that while global financial markets have steadied in recent weeks, slowing growth in China and weak global demand still pose risks to the economy.
The loonie was lower against the euro, with EUR/CAD advancing 0.85% to 1.4750.