The U.S. dollar dropped against its Canadian counterpart on Wednesday, as dovish comments by Federal Reserve Chair Janet Yellen weighed on the greenback and rising oil prices lent support to the commodity-related Canadian currency.
USD/CAD hit 1.2990 during early U.S. trade, the pair’s lowest since March 18; the pair subsequently consolidated at 1.3000, declining 0.57%
The pair was likely to find support at 1.2919, the low of March 18 and a five-month trough and resistance at 1.3215, Tuesday’s high.
In a speech at the Economic Club of New York late Tuesday, Yellen said global risks to the U.S. economy, including low oil prices and uncertainty over China justified taking a cautious approach to tightening monetary policy.
The comments contrasted with recent remarks by some Fed officials who indicated that the bank could act as soon as next month to raise interest rates.
The greenback shrugged off a report by payroll processing firm ADP showing that non-farm private employment rose by 200,000 last month, surpassing expectations for an increase of 194,000.
The economy created 205,000 jobs in February, whose figure was downwardly revised from a previously reported increase of 214,000.
Meanwhile, oil prices rebounded on a smaller than anticipated rise in crude oil stockpiles last week, boosting demand for commodity currencies such as the Canadian dollar.
The loonie was higher against the euro, with EUR/CAD retreating 0.45% to 1.4697.