Investing.com - The U.S. dollar fell to session lows against the Canadian dollar on Wednesday after the Bank of Canada left monetary policy on hold and struck a less dovish tone in its rate statement.
USD/CAD hit lows of 1.1353 following the announcement, down from around 1.1384 ahead of the release.
The BoC left rates on hold at 1.0% in a widely anticipated decision and said inflation has risen more strongly than expected.
The central bank said the recovery in the U.S. economy has “clearly strengthened” which has benefited Canadian exports. Canada’s economy is showing signs of a broadening recovery the bank said, but noted that lower prices for oil and other commodities will weigh on growth.
The bank said the output gap was smaller than projected in October, but added that labor market continued to indicate significant slack in the economy.
At the same time, data showed that U.S. service sector activity increased at a stronger than expected rate in November.
The Institute for Supply Management’s services purchasing managers index rose to 59.3 last month from 57.1 in October, ahead of forecasts of 57.5.
The employment and imports components of the index both declined, but remained above the 50 level that separates expansion from contraction.
Earlier Wednesday, another report showed that the Markit U.S. services index ticked down to 56.2 in November from 57.1 in October, and down slightly from an initial estimate of 56.3.
Also Wednesday, payroll processor ADP reported that the U.S. private sector created 208,000 jobs in November, falling short of expectations for jobs growth of 223,000 and down from 233,000 in October.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, was up 0.33% to more than four year highs of 88.98.