Forexpros – The U.S. dollar was steady against its Canadian counterpart on Tuesday, trading close to the session high, as positive U.S. data dampened expectations for a third round of U.S. monetary easing as investors eyed the outcome of the Federal Reserve’s policy meeting later in the day.
USD/CAD hit 0.9931 during early U.S. trade, the session high; the pair subsequently consolidated at 0.9220, dipping 0.04%.
The pair was likely to find support at 0.9889, the session low and resistance at 0.9931, the session high.
Official data showed that U.S. retail sales rose to the highest level in five months in February, increasing by a seasonally adjusted 1.1%, in line with expectations.
Core retail sales, which exclude automobile sales, rose by 0.9% last month, above expectations for a 0.8% gain.
The data further dampened expectations for a third round of monetary stimulus by the Fed, after data on Friday showed that the U.S. economy added more jobs than forecast in February.
Earlier in the day, a report by the ZEW Centre for Economic Research said that its index of German economic sentiment advanced to the highest level since June 2010 in March, easing concerns over a slowdown in the euro zone’s largest economy.
But concerns that the debt crisis in the euro zone could flare up again lingered as Spain faced calls from European leaders to make deeper budget cuts, after the country’s prime minister raised the deficit target earlier this month.
The Canadian dollar came under pressure as oil prices slipped, with crude oil contracts for delivery in April sliding 0.38% on the New York Mercantile Exchange, to trade at USD105.94 a barrel.
Raw materials, including oil account for about half of Canada’s export revenue.
The loonie, as the Canadian dollar is also known, was sharply higher against the euro, with EUR/CAD tumbling 0.74% to hit 1.2959.
The Fed was to announce its benchmark interest rate later in the day; the announcement was to be accompanied by the central bank’s rate statement. In addition, euro zone finance ministers were set to continue talks in Brussels throughout the day.
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