Investing.com - The U.S. dollar pared back gains against the Canadian dollar on Wednesday after the Bank of Canada kept interest rates on hold and revised up its outlook for economic growth.
USD/CAD hit lows of 1.2754, levels not seen since July, down from the day’s highs of 1.2800.
The BoC held the overnight rate at 0.5%, where it has been since last July, when the bank cut rates for the second time in 2015.
Growth in the global economy is expected to strengthen gradually from about 3% in 2016 to 3.5% in 2017-18, a weaker outlook than projected in January, the bank said in a statement accompanying the rate announcement.
But the bank revised up its economic growth forecast for 2016, saying the fiscal measures announced in the March federal budget will have a notable positive impact on growth.
The central bank raised its forecast for 2016 economic growth to 1.7% from 1.4%. For 2017, it lowered its growth projection slightly to 2.3% from 2.4%.
Inflation in Canada continues to track largely as anticipated, the bank said. Total CPI inflation is below the bank’s target of 2% and is likely ease further before returning to target.
The greenback remained stronger against the other major currencies.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.72% at 94.7, off Tuesday’s eight-month lows of 93.62.
The dollar remained stronger despite economic reports showing that U.S. retail sales and producer prices fell in March.