The Canadian dollar dropped against its most major opponents in the European session on Wednesday, as oil prices weakened in the wake of a higher dollar ahead of the release of minutes from the Federal Reserve’s meeting in January.
Crude for April delivery fell $0.53 to $61.26 per barrel.
Investors focus on minutes, due at 2:00 pm ET, for further insight on inflation and interest rate outlook. The focus also remains on a slew of speeches by Fed officials for hints about the path for further rate hikes this year.
A higher dollar tends to make oil and other dollar-denominated commodities more costlier for holders of other currencies.
The American Petroleum Institute releases its weekly crude inventory report later in the day, while the Energy Information Administration will publish its official data on Thursday. The releases have been delayed by a day due to U.S. holiday on Monday.
The loonie traded mixed against its major rivals in the Asian session. While it rose against the aussie and the yen, it fell against the euro and the greenback.
The loonie dropped to 84.80 against the yen, from a 6-day high of 85.26 hit at 10:15 pm ET. Continuation of the loonie’s downtrend may take it to a support around the 82.5 level.
Data from the Ministry of Economy, Trade and Industry showed that Japan’s all industry activity growth halved in December.
The all industry activity index rose 0.5 percent month-on-month in December, following November’s 1 percent increase. Nonetheless, this was the third consecutive increase in activity and bigger than the expected 0.4 percent rise.
The loonie weakened to near a 2-week low of 1.2670 against the greenback and held steady thereafter. The pair ended Tuesday’s trading at 1.2645.
The loonie fell back to 1.5612 against the euro, a pip short of its Asian session’s 5-day low of 1.5613. On the downside, 1.58 is likely seen as the next support for the loonie.
Flash data from IHS Markit showed that Eurozone private sector growth continued to rise at a steep pace in February, albeit with the rate of expansion cooling from the near 12-year high in January.
The composite output index dropped to 57.5 from 58.8 in the previous month. The score was forecast to fall to 58.4.
On the flip side, the loonie held steady against the aussie, after having recovered from a 3-week low of 0.9989 set at 7:30 pm ET. The pair was valued at 0.9966 when it closed deals on Tuesday.
Looking ahead, Markit’s U.S. manufacturing PMI for February and existing home sales for January are scheduled for release in the New York session.
The Bank of England Governor Mark Carney, Deputy Governor Ben Broadbent and policy makers Andy Haldane and Silvana Tenreyro will testify on inflation and the economic outlook before the Treasury Select Committee at 9:15 am ET.
At 2:00 pm ET, the Fed minutes from January 30-31 meeting are due.