Forexpros – The U.S. dollar rallied to an eight-day high against its Canadian counterpart on Monday, as sustained concerns over the handling of the debt crisis in the euro zone weighed on demand for riskier assets.
USD/CAD hit 1.0278 during early U.S. trade, the pair’s highest since November 30; the pair subsequently consolidated at 1.0273, surging 1.02%.
The pair was likely to find support at 1.0166, the low of December 9 and resistance at 1.0362, the high of November 30.
European Union leaders agreed on Friday to draft a new treaty to implement tighter fiscal consolidation across the euro zone and to provide EUR200 billion in loans to the International Monetary Fund to assist countries with debt problems.
But investors remained unsure over whether the measures would go far enough to tackle the region’s debt crisis after the European Central Bank indicated that it had no plans to increase its bond purchasing program, capping weekly bond purchases at EUR20 billion.
Earlier Monday, Standard & Poor’s chief European economist said Friday’s agreement was a significant step in resolving a “crisis of confidence,” but warned that time is running out and more action is needed.
The comments came after S&P placed the credit ratings of 15 euro zone members, including France and Germany, on watch for a potential downgrade last week.
Sentiment was also hit after Moody’s said it will review the ratings of all EU countries in the first quarter, saying Friday’s summit failed to deliver “decisive policy measures” to end the region’s debt crisis.
Meanwhile, the loonie also came under pressure as light, sweet crude futures for delivery in January traded at USD97.89 a barrel on the New York Mercantile Exchange, tumbling 1.46%.
Raw materials, including oil account for about half of Canada’s export revenue.
The loonie was higher against the euro with EUR/CAD shedding 0.06%, to trade at 1.3605.
Later in the day, the U.S. was to publish official data on the federal budget balance.
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