The U.S. dollar rose to three-week highs against its Canadian counterpart on Wednesday, helped by the release of positive U.S. data and the perspective of a rate hike in December by the Federal Reserve.
USDCAD was up 0.19% at 1.2400, the highest since September 6.
The greenback found support after the Commerce Department said durable goods orders rose more than forecast in August, recovering from a slump in the prior month and bolstering optimism over the U.S. economy.
In a speech on Tuesday, Fed Chair Janet Yellen said that the Federal Reserve needs to continue gradual interest rate hikes despite uncertainty about the path of inflation.
It would be “would be imprudent to keep monetary policy on hold until inflation is back to 2%,” she said.
The U.S. dollar was also boosted ahead of a highly-anticipated U.S. tax plan, set to be unveiled on Wednesday. The plan has been developed over several months by six White House and congressional Republicans, with no input from Democrats.
The loonie was higher against the euro, with EURCAD sliding 0.41% to 1.4506.
Investors were still digesting the fact that German Chancellor Angela Merkel will be facing months of coalition talks to try to form a stable government.
Political risk in Spain also weighed on the single currency, with the Catalan government planning to hold a referendum on whether to break away from Spain on Sunday, despite opposition from Spanish authorities.