Canadian Dollar Drops As Oil Prices Slide

The Canadian dollar weakened against the other major currencies in the Asian session on Tuesday, as oil prices slid amid speculations that the major OPEC members will stick to planned output reduction, and also on expectation that U.S. oil production is likely to rise.

Meanwhile, investors turned cautious ahead of U.K. Prime Minister Theresa May's speech on her government's Brexit plans later today and amid growing uncertainty over U.S. policy ahead of President-elect Donald Trump's inauguration later this week.

Traders await the Bank of Canada's upcoming policy meeting on Wednesday, eventhough the economists expect no change.

Monday, the Canadian dollar showed mixed trading against its major rivals. While the loonie fell against the U.S. dollar and the yen, it rose against the euro. Against the Australian dollar, the loonie held steady.

In the Asian trading, the Canadian dollar fell to nearly a 3-week low of 86.42 against the yen, a 6-day low of 1.3189 against the U.S. Dollar, and a 4-day low of 1.3987 against the Australian dollar, from yesterday's closing quotes of 86.65, 1.3173 and 1.3955, respectively. If the loonie extends its downtrend, it is likely to find support around 84.00 against the yen, 1.34 against the greenback, and 1.45 against the euro.

Against the Australian dollar, the loonie dropped to 0.9856 from yesterday's closing value of 0.9849. The loonie may test support near the 1.01 region.

Looking ahead, U.K. consumer price, producer price, retail price indexed for December, and house price index for November and German ZEW economic sentiment index for January are due to be released later in the day.

At 6:00 am ET, European Central Bank Governing Council Member Ewald Nowotny takes part in a panel discussion on "euro reforms in turbulent times", in Vienna.

In the New York session, U.S. Empire State manufacturing index for January is slated for release.

At 8:45 am ET, Federal Reserve Bank of New York President William Dudley is expected to speak about consumer behavior at the National Retail Federation Convention and Expo, in New York.

At 10:00 am ET, Federal Reserve Board Governor Lael Brainard is expected to speak on monetary and fiscal policy before the Brookings Institution, in Washington, U.S.

Subsequently, Federal Reserve Bank of San Francisco President John Williams is expected to speak before the Sacramento Business Review Economic Forecast event, in Sacramento, U.S.

Later in the day, the UK Prime Minister Theresa May is expected to speak about details of the United Kingdom's exit from the European Union, in London.