Investing.com - The U.S. dollar fell to session lows against the Canadian dollar on Wednesday after the Bank of Canada struck a more hawkish tone on the economic recovery after leaving interest rates on hold.
USD/CAD was down 0.38% to 1.0883 from 1.0908 ahead of the bank’s rate statement.
The pair was likely to find support at around 1.0840 and resistance at the 1.0940 level.
The loonie, as the Canadian dollar is also known, was boosted after the BoC noted that exports had surged in the second quarter after a weaker winter, bolstered by stronger U.S. investment spending and the depreciation in the domestic dollar.
The bank added that activity in the housing market has been stronger than anticipated.
The BoC also noted that the recovery in Europe appeared to be faltering as a result of the crisis in Ukraine but added that the “solid” recovery in the U.S. was back on track.
The central bank left its overnight rate unchanged at 1.00%, saying that the risks to the outlook for inflation remain roughly balanced, while the risks associated with household imbalances have not diminished.
Elsewhere, the loonie was also higher against the euro, with EUR/CAD slipping 0.18% to 1.4323, down from 1.4337 earlier.
The single currency remained under pressure ahead of the European Central Bank’s monthly meeting on Thursday.
The euro fell to 11 month lows against the Canadian dollar earlier in the week amid mounting expectations that the ECB will announce quantitative easing measures as a way to shore up growth in the region.
Data on Wednesday showed that activity in the German and French service sectors slowed in August, while Italy’s service sector contracted, adding to pressure on the bank to act.