The Canadian dollar strengthened against its key counterparts in the New York session on Wednesday, as the Bank of Canada kept the benchmark rate on hold amid signs of improvement in Canadian economy, and oil prices rallied on hopes that OPEC may back output cuts beyond June.

The central bank decided to leave its key rate unchanged at 0.5 percent, as expected.

In its monetary policy report, the bank forecasts the economy to continue to grow during the rest of the year, albeit at a more moderate pace, supported by rising foreign demand, federal fiscal stimulus and accommodative monetary and financial conditions.

The bank upped its annual growth forecast to 2.6 percent in 2017, from its January forecast of 2.1 percent, reflected by economic strength at the start of the year.

Oil prices rallied amid hopes that Saudi Arabia would back an extension to OPEC deal to output cuts beyond June, and on OPEC report showed tightening oil supplies in March, given compliance with the OPEC deal.

Crude for May delivery rose $0.08 to $53.48 per barrel.

In its monthly report, OPEC said that its production fell by 153,000 barrels per day in March to average 31.93 million barrels per day, led by lower production in the United Arab Emirates and Venezuela.

The loonie has been trading higher against its major rivals in the European session, amid rising oil prices.

The loonie appreciated to 1.3266 against the greenback, its strongest since March 21. If the loonie extends rise, 1.30 is likely seen as its next resistance level.

Data from the Labor Department showed an unexpected decline in U.S. import prices in the month of March.

The Labor Department said import prices dipped by 0.2 percent in March after climbing by a revised 0.4 percent in February.

The loonie climbed to a 1-1/2-month high of 1.4072 against the euro, from a low of 1.4153 hit at 2:00 am ET. Continuation of the loonie's uptrend may see it challenging resistance around the 1.39 mark.

Data from Destatis showed that German wholesale price inflation eased for the first time in five months in March.

Wholesale prices rose 4.7 percent year-over-year in March, slower than the 5.0 percent climb in February, which was the highest rate of increase since August 2011. The measure has been rising since October 2016.

The loonie strengthened to 82.67 against the yen, off its early 8-day low of 82.01. The loonie is seen finding resistance around the 84.00 level.

Data from the Bank of Japan showed that Japan's producer prices rose up 0.2 percent on month in March.

That was shy of expectations for a gain of 0.3 percent, which would have been unchanged from February following an upward revision from 0.2 percent.

The loonie firmed to 0.9926 against the aussie, a level not seen since February 2. The next possible resistance for the loonie may be found around the 0.97 region.

At 11:15 am ET, Bank of Canada Governor Stephen Poloz and Bank of Canada Senior Deputy Governor Carolyn Wilkins will hold a press conference on Monetary Policy Report in Ottawa.

Euro vs CAD (FX:EURCAD)
Forex Chart
From Feb 2024 to Mar 2024 Click Here for more Euro vs CAD Charts.
Euro vs CAD (FX:EURCAD)
Forex Chart
From Mar 2023 to Mar 2024 Click Here for more Euro vs CAD Charts.