The Canadian dollar rose to one-week highs against its U.S. counterpart on Today ahead of congressional testimony by Federal Reserve Chair Janet Yellen later in the session.
USD/CAD touched lows of 1.3025, the lowest level since February 6 and was last at 1.3040, off 0.24% for the day.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.13% to 100.86, off Monday’s high of 101.11, the most since January 11.
Yellen will present the Fed’s report on monetary policy and the economy to the U.S. Senate on Today and the House on Tomorrow, her first testimony since the U.S. central bank hiked rates in December.
Investors will be watching her comments for clues on when the Fed could next raise interest rates. The Fed has indicated that it could hike rates three times this year.
In the U.S. data on Today showed that producer prices rose at the fastest rate in four years in January as energy costs surged, but the stronger dollar meant that underlying inflation remained tame.
The producer price index rose 0.6% in January, the Labor Department said.
Demand for the Canadian dollar continued to be underpinned after U.S. President Donald Trump on Monday downplayed potential changes to trade ties between the U.S. and Canada.
In a joint press conference with Canadian Prime Minister Justin Trudeau, Trump said that the U.S. will be “tweaking” its trade relationship with Canada.
The loonie, as the Canadian dollar is also known, was supported by higher prices for oil, a major Canadian export.
Oil prices pushed higher as traders looked ahead to reports from the U.S. on stockpiles of crude and refined products.