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Canadian Dollar Weakens As Oil Prices Fall

The Canadian dollar lost ground against other major currencies in early European deals on Tuesday amid a decline in oil prices.

Crude for March delivery fell 0.07 cents or 0.07 percent to $95.48 per barrel at 3:58 am ET.

Sentiment weakened after European Central Bank President Mario Draghi told European lawmakers in Brussels yesterday that he expects economic weakness in the early part of 2013 to be followed by a very gradual recovery later in the year.

He said the "risks to the outlook for price developments are broadly balanced over the medium term with upside risks relating to higher administered prices and indirect taxes, as well as higher oil prices, and downside risks stemming from weaker economic activity and, more recently, the appreciation of the euro exchange rate."

The loonie fell to 1.0474 against the Australian dollar for the first time since January 30. If the loonie slides further, it may break 1.05 level. At yesterday's close, the pair was worth 1.0420.

Members of the Reserve Bank of Australia's monetary policy board felt that additional stimulus could be delivered in the future if needed, minutes from the bank's board meeting on February 5 revealed today.

The bank supported that position by noting that the 2013 outlook for the Australian economy is below trend, while inflation remains in check.

The loonie reached near a 7-month low of 1.0126 against the U.S. dollar, down 0.18 percent from yesterday's close of 1.0108. The loonie may seek support around 1.02 level.

The Canadian currency that ended yesterday's deals at 92.99 against the yen hit a 4-day low of 92.31. On the downside, the loonie may break 91.00 level.

Members of the Bank of Japan's monetary policy board are firmly committed to defeating deflation and achieving price stability, minutes from the bank's board meeting on January 21 and 22 revealed.

The BoJ also warned that circumstances in Europe and the United States will continue to pose downside risks to the Japan economy - which is otherwise expected to level off.

The loonie fell to 1.3525 against the euro, its lowest level since February 13. The loonie may face support at 1.36 level. The pair finished Monday's trading at 1.3497.

German ZEW economic sentiment index for February and Eurozone construction output for December are due shortly.

Canada wholesale sales for December and U.S. NAHB housing market index for February are expected in the New York morning session.

by RTTNews Staff Writer

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