The U.S. dollar hit a six-day high against its Canadian counterpart on Monday, as euro zone debt concerns and global growth fears continued to weigh on sentiment ahead of a meeting of euro zone ministers due to begin later in the day.
USD/CAD hit 1.0215 during U.S. morning trade, the highest since June 29; the pair subsequently consolidated at 1.0209, adding 0.15%.
The pair was likely to find near-term support at 1.0138, the low from July 6 and resistance at 1.0266, the high from June 27.
The greenback remained supported amid concerns over a deeper-than-expected slowdown in China. Government data released earlier showed that consumer price inflation accelerated at the slowest rate since January 2010 in June.
Concerns over the pace of the U.S. economic recovery resurfaced after official data on Friday showed that the U.S. economy added just 80,000 jobs in June, below market expectations for a gain of around 90,000.
Although the employment report was weaker than expected, many investors said it was not bad enough to spur the Federal Reserve to launch a third round of quantitative easing.
Meanwhile, investors were awaiting a meeting of euro zone finance ministers later in the day to discuss a plan announced last month to help the region’s indebted nations and banking systems.
Investors continued to monitor rising bond yields for peripheral euro zone nations, amid sustained fears over the region’s debt crisis.
Spanish 10-year yields rose above the psychologically important 7% earlier, hitting 7.11%, reversing the decline made in wake of last week’s European Union summit. Similar-maturity Italian yields increased to 6.13%.
Elsewhere, the loonie, as the Canadian dollar is also known, was lower against the euro, with EUR/CAD adding 0.23% to trade at 1.2552.
Sentiment on the euro remained fragile as European Central Bank President Mario Draghi reiterated comments made last week, after the bank cut its benchmark interest rate to a record low of 0.75%, saying that economic indicators for the second quarter point to weakening growth in the euro zone.