Forexpros – The U.S. dollar advanced to a session high against its Canadian counterpart on Wednesday, as renewed concerns over the ongoing financial crisis in the euro zone curtailed demand for riskier assets.
USD/CAD hit 1.0162 during early U.S. trade, the session high; the pair subsequently consolidated at 1.0135, gaining 0.28%.
The pair was likely to find support at 1.0075, Tuesday’s low and resistance at 1.0196, Tuesday’s high.
Market sentiment softened after a closely watched auction of German government bonds met with lackluster investor demand and failed to ease investor concerns over borrowing conditions in the euro zone.
Germany sold EUR4.06 billion of 10-year bonds at an average yield of 1.93%, compared with 1.98% at November’s launch of the January 2022 bond, which was the worst German bond auction on record.
Meanwhile, concerns over the health of the European banking sector also weighed after a report showing that bank deposits at the European Central Bank’s overnight facility reached a new all-time high of EUR453 billion on Tuesday, underlining the unwillingness of European banks to lend to each other.
But the Canadian dollar found some support as crude oil prices remained reasonably high, with crude oil for delivery in February trading at USD102.67 a barrel on the New York Mercantile Exchange, slipping 0.29% on the day.
Raw materials, including oil account for about half of Canada’s export revenue.
The Canadian dollar was higher against the euro, with EUR/CAD shedding 0.50% to hit 1.3124.
Later Wednesday, the U.S. was to release data on factory orders.
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