The U.S. dollar slipped lower against its Canadian counterpart on Wednesday, pulling away from a fresh 12-1/2 year peak as investors locked in profits, while the ongoing oil rout continued to weigh heavily on the Canadian currency.
The pair was likely to find support at 1.4062, the low of January 11, and resistance at 1.4315, Tuesday’s high, and a 12-1/2 year peak.
The greenback found support on Wednesday after China’s central bank fixed the midpoint rate for the yuan at levels close to the fix of the previous two days, easing concerns over the rapid depreciation of the currency seen at the start of the year.
At the same time, official figures showed that Chinese exports rose 2.3% in yuan-denominated terms in December from a year earlier, rebounding from a 3.7% drop in November.
Exports were down 1.4% on a year-over-year basis in December in dollar terms, compared to forecasts for a drop of 8.0%.
Imports fell by 4% in yuan terms, after a 5.6% drop in November. In dollar terms, imports fell 7.6% from a year earlier, better than forecasts for an 11.5% decline.
The data indicated that the Chinese economy may be stabilizing, easing fears over a China-led slowdown in global growth.
Meanwhile, despite a rise in oil prices to $31.23 a barrel in U.S. morning trade, the commodity-related Canadian dollar remained under heavy pressure after crude dropped below $30 a barrel on Tuesday.