Investing.com - The U.S. dollar rose to one-and-a-half month highs against its Canadian counterpart on Wednesday, supported by the release of stronger than expeted data on U.S. second quarter growth as markets eyed the Federal Reserve's upcoming policy statement.
USD/CAD hit 1.0894 during early U.S. trade, the pair's highest since June 11; the pair subsequently consolidated at 1.0892, gaining 0.36%.
The pair was likely to find support at 1.0835, the low of June 18 and resistance at 1.0941, the high of June 9.
The Commerce Department reported that gross domestic product expanded at an annual rate of 4.0% in the three months to June, outstripping forecasts of 0.3%. The contraction in the first quarter was revised to 2.1% from a previously reported 2.9%.
Personal consumption grew 2.5%, well above predictions of 1.9%, the report said, adding to the view that the economic recovery is gaining traction.
The robust data offset a report showing that the U.S. private sector added just 218,000 jobs in July, falling short of forecasts for jobs growth of 230,000.
Investors were still awaiting the outcome of the Federal Reserve’s latest policy meeting later in the day, as well as the government nonfarm payrolls report for July on Friday.
The dollar has strengthened since Fed Chair Janet Yellen said earlier this month that interest rates could rise sooner if the recovery in the labor market continued.
In Canada, official data showed that the raw materials price index rose 1.1% in June, compared to expectations for a 0.6% gain, after a 0.3% fall in May.
The loonie was fractionally lower against the euro, with EUR/CAD edging up 0.13% to 1.4571.
The euro remained under pressure amid concerns over the divergence in monetary policy between the European Central Bank and its major peers.
Data earlier showed that Spain’s economy grew at a faster than expected rate in the second quarter, but a separate report showed that consumer prices fell unexpectedly this month, underling concerns over the threat of deflationary pressures in the euro area.
Another report showed that the annual rate of inflation in Germany slowed to 0.8% this month from 1% in June.
The euro zone was to release what would be closely watched data on consumer prices on Thursday.