Investing.com - The U.S. dollar pulled back from four-and-half year highs against the Canadian dollar on Wednesday as investors turned their attention to the Federal Reserve’s policy statement later in the trading day.
USD/CAD was down 0.25% to 1.1124 after rising to highs of 1.1187 earlier, the strongest level since July 2009.
The pair is likely to find support at 1.1065 and resistance at 1.1350.
The U.S. central bank was expected to roll back its asset purchase program by another $10 billion, to $65 billion per month. The central bank announced the first cut to its stimulus program in December.
A renewed selloff in emerging market currencies hit investor confidence after South Africa’s central bank hiked interest rates to 5.5% from 5% in a bid to arrest the steep decline in the rand. The rand initially rose against the dollar, before tumbling to five year lows.
Turkey’s lira also weakened against the dollar, falling back to levels seen before Tuesday’s night’s dramatic rate hike by Turkey’s central bank.
Emerging markets economies have been hard hit in recent sessions by worries over the impact of cuts in Fed stimulus and concerns over a possible slowdown in China.
The loonie, as the Canadian dollar is also known, remained under heavy selling pressure following a policy stance shift by the Bank of Canada last week. The BoC said inflation would remain below target for some time to come and left the door open to a rate cut.
Elsewhere, the loonie was higher against the euro, with EUR/CAD down 0.23% to 1.5316.