Daily Afternoon Report 03.07.2017

The U.S. dollar pared gains against its Canadian counterpart on Monday, as higher oil prices lent support to Canadian dollar, although trading volumes were expected to be thin with Canadian markets closed for Canada Day and ahead of Independence Day in the U.S. on Tuesday.

The commodity-related Canadian dollar benefited from a continued rise in oil prices on Monday, after data last week pointed to a decline in U.S. output.

Meanwhile, sentiment on the greenback remained vulnerable amid growing expectations for tighter monetary policy from major central banks.

In comments last week the heads of the European Central Bank, the Bank of England and the Bank of Canada adopted a more hawkish view on monetary policy, indicating that they were getting ready to join the Federal Reserve in policy tightening.

Hawkish signals from foreign central banks contrasted with doubts over whether the Fed will be able to hike rates again this year given a recent batch of weak U.S. economic data and growing skepticism that the Trump administration will be able to deliver on its pro-growth agenda.