The U.S. dollar slid lower against its Canadian counterpart on Tuesday, as weak U.S. durable goods data weighed on the greenback, as well as caution ahead of the Federal Reserve’s policy statement on Wednesday, while rising oil prices boosted the Canadian currency.
The U.S. Commerce Department said that total durable goods orders rose 0.8% last month, compared to expectations for a increase of 1.8%. February’s orders were revised down to a decrease of 3.1% from a previously reported 3.0% decline.
Core durable goods orders, which exclude volatile transportation items, slipped 0.2% last month, compared to forecasts for a 0.5% increase. February’s core durable goods orders had shown a 1.3% decline.
The greenback was also hit as traders remained cautious ahead of the Fed’s upcoming policy meeting, due to conclude on Wednesday amid ongoing uncertainty over the pace and timing of future rate hikes.
The commodity-related Canadian dollar found support as oil prices bounced back on Tuesday thanks to a weaker U.S. dollar. Gains were expected to remain limited however as Saudi Arabia, Iran and Kuwait announced output increases, adding to concerns over a global supply glut.
Separately, Bank of Canada Governor Stephen Poloz said on Tuesday that the global economy was still facing severe headwinds which supported the use of low interest rates, but saw no signs of an impending recession.
Speaking in New York, Poloz said “ultra-low” interest rates were not causing rapid growth and inflation because many of the negative forces from the global financial crisis “are still acting now”.
The BoC head stated his belief however that the global economy will continue to recover, albeit at a slow pace.