The U.S. dollar was almost unchanged near three-week highs against its Canadian counterpart on Tuesday, as investors were eyeing a speech by Federal Reserve Chair Janet Yellen due later in the day and as lower oil prices weighed on the commodity-related Canadian currency.
USD/CAD was little changed at 1.2361 by 09:30 a.m. ET (13:30 GMT).
Janet Yellen's comments will be monitored closely for any new insight on policy after the U.S. central bank last week announced it would begin trimming down its $4.5 trillion in assets and signaled it will likely raise rates again this year.
New York Federal Reserve Bank President William Dudley on Monday said the Fed is on track to gradually raise interest rates given factors depressing inflation are "fading" and the U.S. economy's fundamentals are sound.
“I expect inflation will rise and stabilize around the (Fed's) 2% objective over the medium term," he said before adding that "in response, the Federal Reserve will likely continue to remove monetary policy accommodation gradually."
However, Chicago Federal Reserve Bank President Charles Evans said shortly after that the U.S. central bank should wait until there are clear signs that income and prices are rising before raising interest rates again, warning that moving too fast would be a policy “misstep.”
Meanwhile, investors remained cautious after North Korea's foreign minister Ri Yong Ho said on Monday that President Donald Trump had declared war on the country and that Pyongyang reserved the right to shoot down U.S. bombers, even if they are not in its air space.
The Canadian dollar was also weighed down by a slide in oil prices as traders locked in profits from the commodity's recent rally to multi-month highs.
The loonie was higher against the euro, with EUR/CAD down 0.52% at 1.4578.
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