Investing.com - The U.S. dollar dropped to more than three-month lows against its Canadian counterpart on Wednesday, weighed by the release of disappointing U.S. data and as comments by Bank of Canada Governor Stephen Poloz continued to boost the local currency.
USD/CAD hit 1.3165 during early U.S. trade, the pair’s lowest since February 27; the pair subsequently consolidated at 1.3181, declining 0.46%.
The pair was likely to find support at 1.3081, the low of February 27 and resistance at 1.3326, Tuesday’s high.
The U.S. Commerce Department said retail sales fell 0.3% in May, compared to forecasts for a 0.1% rise.
Core retail sales, which exclude automobiles, decreased by 0.3% last month, disappointing expectations for an increase of 0.2%.
A separate report showed that the U.S. consumer price index fell by 0.1% last month, confounding forecasts for an increase of 0.1%. Year-over-year, consumer prices gained 1.9%, missing expectations for 2.0% rise.
Core consumer prices, which exclude food and energy costs, inched up by 0.1%, below forecasts for a 0.2% rise.
Later Wednesday, the Fed was widely expected to raise interest rates by 25 basis points from 1.00% to 1.25%.
Market participants were especially awaiting Fed Chair Janet Yellen’s comments following the decision for indications on the future pace of rate hikes.
Investors were also cautious as more than 190 Democratic lawmakers sued President Donald Trump accusing him of receiving funds from foreign governments through his firms and thus of violating the constitution.
Meanwhile, the Canadian dollar remained supported after BoC Governor Poloz said on Tuesday that "the interest rates cuts undertaken by the central bank in 2015 have largely done their job as the economy appears to be gathering momentum."
The remarks came a day after a senior policymaker said the BoC will assess whether low interest rates will still be needed as the economy continues to grow, sparking expectations for a rate hike before then end of the year.
The loonie was steady against the euro, with EUR/CAD at 1.4852.