Canadian Dollar Lower On Falling Oil Prices

The Canadian dollar weakened against its major counterparts in the European session on Tuesday, as oil prices dropped on optimism about ceasefire talks between Ukraine and Russia and rising COVID-19 cases in China that raised demand concerns.

Investors focused on further talks between Russia and Ukraine to reach a ceasefire, after Monday's negotiations ended without a breakthrough.

The latest talks are aimed to achieve a ceasefire, the withdrawal of Russian troops, and security guarantees for Ukraine.

Officials from the United States and China held talks in Rome on Monday and discussed a range of issues including Russia's war in Ukraine.

The White House said that US National Security Advisor Jake Sullivan issued a harsh warning to China saying that it will face significant consequences if it violates sanctions, or aids the war efforts.

On the virus front, China reported a record 5,280 new cases, the most in a single day since the pandemic began.

The loonie dipped to a 6-day low of 1.2871 against the greenback and a 5-day low of 1.4161 against the euro, following its prior highs of 1.2809 and 1.4007, respectively. The loonie may locate support around 1.31 against the greenback and 1.44 against the euro.

The loonie edged down to 0.9252 against the aussie, after rising to nearly a 2-week high of 0.9202 in the previous session. On the downside, 0.94 is possibly seen as the next support level for the currency.

The loonie touched a 4-day low of 91.59 against the yen, easing from an early high of 92.34. The currency is likely to challenge support around the 90.00 mark.

Looking ahead, at 8:15 am ET, Canada housing starts for February are scheduled for release.

Canada manufacturing sales for January, U.S. PPI for February and New York Fed's empire manufacturing survey for March are set to be released in the New York session.