Investing.com - The U.S. dollar erased gains against its Canadian counterpart on Wednesday, after the Bank of Canada kept its benchmark interest rate on hold in March, saying that risks to the inflation profile remained roughly balanced.
USD/CAD pulled away from 1.3447, the session high, to hit 1.3336 during U.S. morning trade, declining 0.53%
The pair was likely to find support at 1.3274, Tuesday’s low and resistance at 1.3553, the high of March 1.
The BoC said it was leaving its overnight cash rate unchanged at 0.50%, in line with market expectations.
In the statement, the BoC noted that the global economy is progressing as it had anticipated in it's January report.
Financial market volatility, reflecting heightened concerns about economic momentum, appears to be abating. Although downside risks remain, the Bank still expects global growth to strengthen this year and next.
Additionally, GDP growth in the Canadian economy the fourth quarter was not as weak as tthe BoC had expected, although it admitted that the the near-term outlook for the economy remains broadly the same as in January.
The commodity-related Canadian dollar also remained supported as oil prices hovered above $37 a barrel on Wednesday, amid ongoing hopes for a production cut.
Meanwhile, investors remained cautious after weak trade data out of China on Tuesday rekindled concerns over a possible slowdown in global economic growth.
China’s exports slumped 25% in February, the biggest drop since May 2009.
The loonie was higher against the euro, with EUR/CAD dropping 0.66% to 1.4663.