Investing.com - The U.S. dollar hit session lows against the Canadian dollar on Tuesday, after an official from the G7 said an earlier statement on exchange rates was misinterpreted.
USD/CAD hit 1.0036 during early U.S. trade, the session low; the pair subsequently consolidated at 1.0039, dipping 0.08%.
The pair was likely to find support at 1.0024, Monday’s low and resistance at 1.0086, the session high and a two-week high.
The Canadian dollar pulled away from session lows against the greenback after a G7 official said the group’s statement was misinterpreted and was intended to signal concern over excess volatility in the yen.
Earlier Tuesday, the G7 reaffirmed its commitment to market determined exchange rates, saying that countries will not target exchange rates and warned that excessive volatility can have “adverse implications” for economic and financial stability.
The statement came ahead of G20 meeting starting Friday, which is likely to feature discussions on competitive currency devaluations.
Elsewhere, Bank of Canada Governor Mark Carney reiterated Tuesday that rate hikes are “less imminent”, as a result of a more subdued inflation outlook and imbalances in the household sector.
Carney made the remarks in an opening statement in testimony before the House of Commons Finance Committee.
Carney also said that G7 members should direct monetary policy at domestic objectives and not at foreign exchange objectives.
The Canadian dollar was lower against the euro, with EUR/CAD up 0.19% to 1.3493.
Investors were awaiting news from a speech by European Central Bank President Mario Draghi in the Spanish Parliament in Madrid, while the European Economic and Financial Affairs Council was holding talks in Brussels.
Market participants were also looking ahead to U.S. President Barack Obama's State of the Union speech later Tuesday for any indications of an agreement to avert automatic tax hikes and spending cuts due to take effect on March 1.
