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Forex - USD/CAD slips to eight day lows in early trade

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Investing.com - The U.S. dollar slipped to the lowest level in eight days against the Canadian dollar in early U.S. trade on Wednesday amid growing uncertainty over the timing of a reduction in Federal Reserve stimulus.

USD/CAD slipped to 1.0585, the lowest level since November 29 and was last down 0.05% to 1.0595.

The pair was likely to find support at 1.0550 and resistance at 1.0644, Tuesday's high.

The dollar slipped amid fresh doubts over whether the Fed will taper its USD85 billion-a-month asset purchase program at its December 17-18 policy meeting, despite last week's stronger-than-forecast U.S. nonfarm payrolls report for November.

The dollar shrugged off news that U.S. Congressional leaders reached an agreement on a two year budget deal on Tuesday. Congress will still need to reach a deal to raise the U.S. debt ceiling in February 2014 in order to avert a default.

The Canadian dollar's gains were capped by concerns that the subdued domestic inflation outlook may prompt the Bank of Canada to keep interest rates on hold for longer.

Elsewhere, the loonie, as the Canadian dollar is also known, was lower against the euro, with EUR/CAD rising 0.21% to 1.4618.

Demand for the shared currency continued to be underpinned as expectations for further monetary easing by the European Central Bank dimmed after the bank sounded less dovish than expected at last week's policy meeting.

The euro received an additional boost after European Union finance ministers moved closer to an agreement on a European banking union on Tuesday, a measure which is seen as key in fending off a repeat of the region's financial crisis.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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