Forex - USD/CAD at 3-month low on stronger market sentiment

Forexpros - The U.S. dollar was close to a three-month low against its Canadian counterpart on Wednesday, as renewed optimism over Europe’s progress on handling its debt crisis boosted risk appetite and overshadowed soft U.S. employment data.

USD/CAD hit 0.9927 during early U.S. trade, the session low and an almost three-month low; the pair subsequently consolidated at 0.9978, shedding 0.45%.

The pair was likely to find support at 0.9913, the low of October 31 and resistance at 1.0047, the session high.

Market sentiment was buoyed by better-than-expected German manufacturing data earlier in the day, while Portugal saw bond yields fall at a successful auction of short-term government debt.

Risk appetite was also supported by hopes that negotiations with Greece’s creditors will be concluded this week, paving the way for a second bailout package.

The dollar remained broadly lower after a report showing that the U.S. private sector added fewer-than-expected jobs in January, while the previous months figure was revised down.

Payroll processing firm ADP said non-farm private employment rose by a seasonally adjusted 170,000 in January, falling short of expectations for an increase of 190,000.

The previous month’s figure was revised down to a gain of 292,000 from a previously reported increase of 325,000.

Meanwhile, the broadly weaker greenback supported oil prices, with crude oil for delivery in March advancing 0.84% to trade at USD99.31 a barrel on the New York Mercantile Exchange.

Raw materials, including oil account for about half of Canada’s export revenue.

The loonie, as the Canadian dollar is also known, was down against the euro, with EUR/CAD rising 0.20% to hit 1.3145.

Later in the day, the U.S. Institute for Supply Management was to publish a report on manufacturing sector activity.