The U.S. dollar rose to 11-1/2 year highs against its Canadian counterpart on Monday, as expectations for a December rate hike by the Federal Reserve lent broad support to the greenback.
USD/CAD hit 1.3474 during early U.S. trade, the pair’s highest since June 2004; the pair subsequently consolidated at 1.3484, advancing 0.91%.
The pair was likely to find support at 1.3313, Friday’s low and resistance at 1.3813.
The greenback strengthened broadly after the Labor Department reported on Friday that the U.S. economy added 211,000 jobs last month, after increasing an upwardly revised 298,000 in October.
The unemployment rate held steady at 5% in November. Economists had forecast jobs growth of 200,000 and no change in the unemployment rate.
The report hardened expectations that the Fed will hike interest rates for the first time since 2006 at its upcoming meeting on December 15-16. Higher U.S. interest rates would make the dollar more attractive to yield-seeking investors.
Meanwhile, the commodity-linked Canadian dollar continued to be pressured by declining oil prices. Crude oil futures for January delivery were down 3.33% at $38.69 at the open of U.S. trading.
The loonie was lower against the euro, with EUR/CAD gaining 0.30% to 1.4576.
Sentiment on the euro remained vulnerable after European Central Bank President Mario Draghi said Friday the ECB would step up stimulus measures if necessary to bring inflation back to target.
The remarks came one day after the euro posted its largest one-day gain against the dollar in more than six years, jumping 3% after the latest easing measures announced by the ECB fell short of market expectations.