The U.S. dollar trimmed losses against its Canadian counterpart on Wednesday, after the release of upbeat U.S. economic reports, although sentiment on the greenback remained vulnerable ahead of the Federal Reserve’s policy statement due later in the day.
USD/CAD eased off 1.3443, the session low, to hit 1.3457 during early U.S. trade, still down 0.16%.
The pair was likely to find support at 1.3395, the low of March 8 and resistance at 1.3517, the high of March 10.
The U.S. Commerce Department said the consumer price index rose 0.1% last month, meeting forecasts. Year-over-year, consumer prices increased by 2.7% in February.
Core consumer prices, which exclude food and energy costs, gained 0.2% last month, in line with expectations.
A separate report showed that U.S. retail sales rose 0.1% in February, in line with forecasts.
Core retail sales, which exclude automobile sales, increased by 0.2% in February, in line with consensus expectations.
In addition, the Federal Reserve Bank of New York said its Empire State manufacturing index slipped to 16.40 in February from 18.70 the previous month. Analysts had expected the index to decline to 15.00.
Later Wednesday, the Fed was widely expected to raise interest rates by a quarter point at the conclusion of its policy meeting later Wednesday, which would put it in a range between 0.75%-1%.
Market participants were especially waiting for indications on the pace of future rate hikes this year.
Fed officials previously projected three rate hikes in 2017, but that might move up to four, amid signs of a recent uptick in inflation and continued strength in the jobs market.
Meanwhile, the commodity-related Canadian dollar benefited from a rally in oil prices on Wednesday, after industry data showed a surprise decline in U.S. crude stockpiles.
The loonie was higher against the euro, with EUR/CAD down 0.10% at 1.4280.