Forex – USD/CAD edges higher in early trade

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© Reuters.  Greenback gains some ground vs. loonie but upside limited© Reuters. Greenback gains some ground vs. loonie but upside limited

Investing.com – The U.S. dollar edged higher against its Canadian counterpart on Monday, as the greenback mildly recovered from the previous week’s broad losses, although concerns over the fate of a U.S. tax reform bill continued to weigh.

USD/CAD was up 0.23% at 1.2712 by 09:30 a.m. ET (13:30 GMT).

Sentiment on the greenback remained fragile after U.S. Senate Republicans unveiled a tax plan on Thursday that differed from the one crafted by House Republicans, highlighting the challenges to reconciling the differences between the two plans with just a short time before the year-end deadline they have set to pass it.

Hopes of tax reform have helped boost the dollar since mid-September. Some traders believe tax reforms could bolster growth, adding pressure on the Federal Reserve to raise interest rates, known as the “Trumpflation” trade.

The U.S. dollar’s gains were also expected to remain limited by a sustained rise in oil prices, which tends to support demand for the commodity-related Canadian currency.

The loonie was lower against the euro, with EUR/CAD rising 0.28% to 1.4835.

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