Forex - USD/CAD erases gains on Greece deal speculation

Forexpros - The U.S. dollar erased gains against its Canadian counterpart on Tuesday, as market sentiment was boosted by speculation that Greek officials were working on the final draft of an agreement on a second bailout for Greece.

USD/CAD pulled back from 0.9995, the session high, to hit 0.9956 during early U.S. trade, dipping 0.03%.

The pair was likely to find short-term support at 0.9927, Monday’s low and a three-month low and resistance at 0.9995, the session high.

Greek Prime Minister Lucas Papademos was to hold talks with coalition leaders later Tuesday to discuss harsh fiscal reforms being demanded by the country’s creditors in exchange for a EUR130 billion aid package.

Greece needs to reach a consensus on the terms of the bailout in order to secure the rescue package and avert a default when a EUR14.5 billion bond repayment comes due on March 20.

Earlier Tuesday, official data showed that the number of new building permits issued in Canada soared in December, rebounding from the previous month’s sharp drop.

Statistics Canada said the number of building permits issued jumped 11.1%, the largest monthly gain since 2007, blowing past expectations for a 0.8% increase.

November’s figure was revised to a 2.6% drop from a previously reported 3.6% decline.

The loonie, as the Canadian dollar is also known, was lower against the euro, with EUR/CAD adding 0.45% to hit 1.3135.

Later in the day, Federal Reserve Chairman Ben Bernanke was due to testify on the economic outlook and federal budget situation before the Senate Budget Committee in Washington.