Investing.com - The Canadian dollar rose to session highs against the U.S. dollar on Wednesday after the Bank of Canada kept interest rates on hold, after surprising markets with an unexpected rate cut in January.
USD/CAD was down 0.23% to 1.2470 from around 1.2518 ahead of the announcement.
The BoC said it was leaving its overnight cash rate unchanged at 0.75%, in line with expectations.
"Financial conditions in Canada have eased materially since January, in response to the Bank’s recent monetary policy action and to global financial developments," the bank said in a statement.
The BoC added that "the risks around the inflation profile are now more balanced and financial stability risks are evolving as expected in January."
In conclusion, policymakers judged that "the current degree of monetary policy stimulus is still appropriate."
At the same time, the Institute of Supply Management reported that service sector activity in the U.S. grew at a faster rate than expected in February, boosting expectations for higher interest rates.
The ISM non-manufacturing purchasing manager's index rose to 56.9 from 56.7 in January. Economists had expected the index to tick down to 56.5.
Earlier Wednesday, a report showed that the U.S. private sector added 212,000 jobs in February, falling short of expectations for an increase of 220,000. January’s figure was revised up to 250,000 from a previously reported 213,000.
Investors were turning their attention to Friday’s government nonfarm payrolls report for further indications on the future possible direction of monetary policy.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last up 0.58% to an 11-year high of 95.98.