Investing.com - The U.S. dollar trimmed gains against its Canadian counterpart on Wednesday, as the improved economic outlook for the U.S. bolstered demand for the currency of America’s largest trading partner.
USD/CAD pulled back from 0.9939, the pair’s highest since Monday, to hit 0.9886 during U.S. morning trade, up just 0.01% on the day.
The pair was likely to find support at 0.9847, the low of March 2 an almost six-month low and resistance at 0.9938, the session high.
Investors trimmed back expectations for a fresh round of monetary easing after the Federal Reserve upgraded its outlook for the economy in Tuesday’s rate statement.
The Fed said it now expects to see “moderate economic growth” after its January statement said growth would be “modest” and added that higher oil prices could place upward pressure on inflation.
The central bank also acknowledged the recent improvement in the labor market, saying it expected the unemployment rate to “decline gradually.”
However, policymakers reiterated their intention to keep the benchmark interest rate unchanged at a record low through late 2014 and warned that risks to the economic recovery still remained.
The outlook for the U.S. recovery was also bolstered after data on Tuesday showed that U.S. retail sales rose to a five-month high of 1.1% in February, coming after data last week showing that the U.S. economy added more jobs than forecast last month.
Elsewhere, the loonie, as the Canadian dollar is also known, was slightly higher against the euro, with EUR/CAD slipping 0.16% to hit 1.2914 and surged to a one-year high against its Australian cousin, with AUD/CAD tumbling 0.76% to hit 1.0352.
Earlier Wednesday, official data showed that the U.S. current account deficit widened more-than-expected in the final three months of 2011.
The U.S. Bureau of Economic Analysis said the country’s current account deficit widened to a seasonally adjusted USD124.1 billion, against expectations for a deficit of USD114.0 billion in the fourth quarter.
Later Wednesday, Fed Chairman Ben Bernanke was due to speak; his comments would be closely watched.
USD/CAD pulled back from 0.9939, the pair’s highest since Monday, to hit 0.9886 during U.S. morning trade, up just 0.01% on the day.
The pair was likely to find support at 0.9847, the low of March 2 an almost six-month low and resistance at 0.9938, the session high.
Investors trimmed back expectations for a fresh round of monetary easing after the Federal Reserve upgraded its outlook for the economy in Tuesday’s rate statement.
The Fed said it now expects to see “moderate economic growth” after its January statement said growth would be “modest” and added that higher oil prices could place upward pressure on inflation.
The central bank also acknowledged the recent improvement in the labor market, saying it expected the unemployment rate to “decline gradually.”
However, policymakers reiterated their intention to keep the benchmark interest rate unchanged at a record low through late 2014 and warned that risks to the economic recovery still remained.
The outlook for the U.S. recovery was also bolstered after data on Tuesday showed that U.S. retail sales rose to a five-month high of 1.1% in February, coming after data last week showing that the U.S. economy added more jobs than forecast last month.
Elsewhere, the loonie, as the Canadian dollar is also known, was slightly higher against the euro, with EUR/CAD slipping 0.16% to hit 1.2914 and surged to a one-year high against its Australian cousin, with AUD/CAD tumbling 0.76% to hit 1.0352.
Earlier Wednesday, official data showed that the U.S. current account deficit widened more-than-expected in the final three months of 2011.
The U.S. Bureau of Economic Analysis said the country’s current account deficit widened to a seasonally adjusted USD124.1 billion, against expectations for a deficit of USD114.0 billion in the fourth quarter.
Later Wednesday, Fed Chairman Ben Bernanke was due to speak; his comments would be closely watched.