Investing.com - The U.S. dollar dropped to five-and-a-half-month lows against its Canadian counterpart on Friday, as upbeat retail sales and inflation data from Canada boosted the loonie, while the greenback remained pressured by the Federal Reserve's latest policy statement.
USD/CAD hit 1.0767 during European afternoon trade, the pair's lowest since January 8; the pair subsequently consolidated at 1.0764, retreating 0.50%.
The pair was likely to find support at 1.0659, the low of January 7 and resistance at 1.0826, the session high.
Official data showed that retail sales in Canada rose 1.1% in April, exceeding expectations for a 0.4% gain, after an increase of 0.1% in March, whose figure was revised up from a previously estimated 0.1% fall.
Core retail sales, which exclude automobiles, in Canada increased by 0.7% in April, more than the expected 0.4% rise. March's figure was revised up to a 0.2% gain from a previously estimated uptick of 0.1%.
A separate report showed that consumer price inflation in Canada rose 0.5% last month, compared to expectations for a 0.2% gain, after a 0.3% increase in April.
Core consumer price inflation, which excludes the eight most volatile items, rose 0.5% in May, beating expectations for a 0.2% uptick, after a 0.2% rise in April.
Meanwhile, the greenback remained under pressure after the Fed gave no indication of when interest rates could start to rise at the conclusion of its two-day meeting on Wednesday. In addition, the Fed’s forecast of where interest rates might reach in the long term fell from 4% to 3.75%.
The central bank cut its bond purchases by $10 billion a month, to $35 billion, saying there was "sufficient underlying strength" in the U.S. economy to continue tapering.
The loonie was higher against the euro, with EUR/CAD declining 0.75% to 1.4611.
In the euro zone, official data earlier showed that German producer price inflation fell 0.2% last month, compared to expectations for a 0.2% rise, after a 0.1% downtick in April.