The U.S. dollar edged lower against its Canadian counterpart on Tuesday, despite the release of downbeat Canadian data and declining oil prices, as sentiment on the greenback became vulnerable ahead of a speech by Federal Reserve Chair Janet Yellen.
USD/CAD hit 1.3154 during early U.S. trade, the pair’s lowest since March 23; the pair subsequently consolidated at 1.3174, slipping 0.10%.
The pair was likely to find support at 1.3034, the low of March 23, and resistance at 1.3285, Monday’s high.
Statistics Canada reported on Tuesday that the raw materials price index fell by 2.6% in February, compared to expectations for a 0.8% decline, after a 0.4% slip the previous month.
Year-on-year, raw material prices dropped 15.1% last month, after a 7.5% fall in January.
The commodity-related Canadian dollar also shrugged off declining oil prices on Tuesday, amid fears that crude’s rebound since February may be tapering out.
The greenback had weakened late Monday after soft data on U.S. consumer spending and inflation prompted the Atlanta Fed to revise down its estimates for first-quarter growth.
The Atlanta Fed lowered its first-quarter growth estimate to 0.6% from 1.4%.
Personal spending edged up 0.1% in February the U.S. Commerce Department said, in line with economists’ expectations, but January’s spending was revised down sharply.
Meanwhile, inflation as measured by the PCE index, the Fed’s preferred inflation measure, dipped 0.1% last month and was up just 1% from a year earlier.
The data indicated that the Fed may raise interest rates only gradually this year, despite the tightening labor market.
The loonie was steady against the euro, with EUR/CAD at 1.4760.