The U.S. dollar erased gains against its Canadian counterpart on Monday, retreating from an eight-month high as risk aversion eased after International Monetary Fund officials said Greece was likely to receive its next tranche of aid later this month.
USD/CAD pulled back from 1.0026, the highest since January 31, to trade at 0.9966 during U.S. morning trade, dipping 0.05%.
The pair was likely to find short-term support at 0.9829, the low of September 8 and resistance at 1.0057, the high of January 31.
Fears over an imminent Greece debt default eased after two senior International Monetary Fund officials said that Greece would receive the next tranche of bailout loans later this month.
The announcement came after Greece’s government said Sunday that it will impose a new property tax to cover a EUR2 billion gap in its budget targets this year.
While the two IMF officials dismissed speculation of an impending Greek default or exit from the euro zone, they added that the next round of aid scheduled for December would be more difficult to arrange unless budget targets are met.
The loonie found further support after crude oil for delivery in October clawed back from a 2.55% drop to trade at USD86.92 a barrel, down 0.4% on the New York Mercantile Exchange.
Raw materials, including oil account for about half of Canada’s export revenue.
The loonie fell below parity against the greenback earlier as mounting concerns over a potential Greek debt default prompted investors to dump riskier assets, boosting demand for the safe haven greenback.
Elsewhere, the Canadian dollar was fractionally higher against the euro, with EUR/CAD easing down 0.04% to hit 1.3602.
Later in the day, Federal Reserve Bank of Dallas President Richard Fisher was to speak on monetary policy in Dallas. His comments will be closely watched for any clues regarding further easing measures.
