Canadian Dollar Rises On Higher Oil Prices, BoC Rate Hike Hopes

The Canadian dollar strengthened against its most major counterparts in early European deals on Monday, on growing expectations for a Bank of Canada rate hike this month.

Stronger than expected Canadian jobs report released last week nearly doubled the likelihood for a rate hike when the BoC meets on January 17.

The key interest rate now stands at 1.0 percent, following rate hikes in July and September last year.

Rising oil prices also propped up the currency.

Oil firmed up following a data showing a drop in the U.S. rig count by five to 742.

Crude for February delivery rose $0.05 to $61.49 per barrel.

Investors await December quarter earnings for directional cues.

The loonie climbed to 1.4872 against the euro, its strongest since November, 2017. On the upside, 1.47 is likely seen as the next resistance for the loonie.

Data from Destatis showed that German factory orders declined more than expected in November.

Factory orders decreased 0.4 percent month-on-month, reversing a revised 0.7 percent rise in October. Orders were forecast to drop 0.2 percent.

The loonie rose back to 91.35 against the yen, from last week's closing value of 91.04. The next possible resistance for the loonie is seen around the 93.00 mark.

The loonie edged up to 0.9715 against the aussie, from its early low of 0.9764. The loonie is likely to target resistance around the 0.96 zone.

Survey from the Australian Industry Group showed that Australia's construction sector continued to expand in December, although at a much slower rate, with a Performance of Construction Index score of 52.8.

That's down sharply from 57.5 in November, although it remains above the boom-or-bust line of 50 that separates expansion from contraction for the 11th consecutive month.

On the flip side, the loonie slipped to 1.2419 against the greenback, from a high of 1.2379 hit at 8:00 pm ET. The loonie is seen finding support around the 1.25 area.

Looking ahead, Eurozone Sentix investor confidence index for January, economic sentiment survey results for December and retail sales data for November are due shortly.

U.S. consumer credit for November is set for release at 3:00 pm ET.

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