Canadian Dollar Higher As Oil Prices Strengthen On China Stimulus Hopes

The Canadian dollar appreciated against its major counterparts during the European session on Tuesday, as oil prices rose amid hopes of more stimulus for China's slowing economy.

Sentiment improved after Beijing said it would allow local governments to use proceeds from special bonds as capital for major projects including highways, gas and power supply and railways.

Expectations that OPEC and its allies will keep ongoing production cuts for a longer period also underpinned crude prices.

OPEC is currently scheduled to meet in Vienna on June 25 to decide output policy for the rest of the year. With the current output deal expiring in June, it is likely that the OPEC will extend the production cut till end of the year.

The currency traded mixed against its major counterparts in the Asian session. While it rose against the aussie and the yen, it held steady against the greenback and the euro.

The loonie climbed to 82.04 against the yen, its strongest since May 23. The next possible resistance for the loonie is seen around the 83.5 level.

Data from the Bank of Japan showed that the M2 money stock in Japan was up 2.7 percent on year in May, coming in at 1,029.8 trillion yen. That follows the downwardly revised 2.5 percent increase in April.

The M3 money stock advanced an annual 2.3 percent to 1,361.7 trillion yen following the 2.2 percent gain in the previous month.

The loonie that closed yesterday's trading at 1.3269 against the greenback advanced to 1.3251. The loonie may test resistance around the 1.30 level, if it rises again.

The loonie edged higher to 1.4986 against the euro, compared to yesterday's closing value of 1.5008. Next key resistance for the loonie is seen around the 1.48 region.

Survey data from the behavioral research institute Sentix showed that Eurozone investor confidence eroded sharply in June as a renewed escalation in trade tensions between the US and China hurt sentiment in the single currency bloc.

The investor confidence index for the euro area fell by 8 points to -3.3 from +5.3 in May. Economists had expected a score of +2.5.

The Canadian currency remained higher at 0.9216 against the aussie, after having advanced to nearly a 3-week high of 0.9215 at 1:30 am ET. The currency is seen finding resistance around the 0.91 region.

Looking ahead, the U.S. producer prices for May are due in the New York session.