Canadian Dollar Strengthens On Risk Appetite

The Canadian dollar strengthened against its major counterparts in early European deals on Tuesday, as European shares rose despite mixed signals from U.S.-China trade front.

Uncertainty about the U.S.-China deal lingered after CNBC reported that China is pessimistic about striking a trade deal due to Trump's reluctance to roll back trade tariffs on Chinese goods.

Concerns eased somewhat after Trump administration has issued a new 90-day extension that will allow U.S. companies to continue doing business with Chinese telecom giant Huawei Technologies.

Earlier on Monday, there were reports in Chinese media that officials from the two countries were engaged in "constructive discussions" in a high-level phone call.

The currency showed mixed trading against its major counterparts in the Asian session. While it rose against the aussie and the greenback, it fell against the yen and the euro.

The loonie advanced to 82.39 against the yen, from a 4-day low of 82.06 hit at 8:00 pm ET. The loonie is seen finding resistance around the 83.5 level.

Bank of Japan Governor Haruhiko Kuroda said that the central bank still has room to lower interest rates further.

However, there were limits to how long rates could go down, he said at the parliament.

The loonie edged up to 1.4612 against the euro, after rising to 1.4633 at 2:00 am ET. On the upside, 1.44 is likely seen as the next resistance level for the loonie.

Data from the European Central Bank showed that the euro area current account surplus declined in September largely due to the fall in primary income.

The current account surplus totaled EUR 28 billion in September versus EUR 29 billion in August. In the same period last year, the surplus came in at EUR 21 billion.

The loonie was trading higher at 1.3205 against the greenback, not far from near a 2-week high of 1.3199 seen at 5:00 pm ET. If the loonie rallies further, it is likely to test resistance around the 1.30 region.

In contrast, the loonie declined to 0.9004 against the aussie, off near a 3-week high of 0.8967 set in the previous session. Next immediate support for the loonie is likely seen around the 0.945 level.

Looking ahead, Canada manufacturing sales for September and U.S. housing starts for October will be featured in the New York session.