Forexpros – The U.S. dollar rallied to a session high against its Canadian counterpart on Monday, as ongoing uncertainty over the debt crisis in the euro zone curbed demand for higher yielding assets.
USD/CAD hit 1.0194 during early U.S. trade, the session high; the pair subsequently consolidated at 1.0171, surging 0.70%.
The pair was likely to find support at 1.0078, the days low and the pair’s lowest since November 9 and resistance at 1.0244, the high of November 9.
Market sentiment was hit after Italy’s Treasury raised the maximum targeted amount of EUR3 billion at an auction of five-year bonds earlier, but yields rose to a euro-era high of 6.29%, up from 5.32% at a similar auction a month ago.
Over the weekend, Italy’s President Giorgio Napolitano appointed former European Commissioner Mario Monti to head a new government as the country attempts to implement austerity measures while simultaneously shoring up economic growth.
The broadly stronger U.S. dollar also weighed on crude oil prices, with the January crude contract on the New York Mercantile Exchange shedding 0.61% to trade at USD98.25 a barrel.
Raw materials, including oil account for about half of Canada’s export revenue.
The Canadian dollar was slightly higher against the euro, with EUR/CAD slipping 0.14% to hit 1.3885.
Also Monday, German Chancellor Angela Merkel said the debt crisis in the euro zone had brought about the continent’s “toughest hour since World War II”.
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