Investing.com - The U.S. dollar rose to the highest level since September 2009 against the Canadian dollar on Tuesday amid expectations that the Federal Reserve will continue to scale back stimulus measures this month.
USD/CAD hit highs of 1.1019 and was last up 0.30% to 1.0980.
The pair was likely to find support at 1.0928, Monday’s low and resistance at 1.1100.
Demand for the U.S. dollar was underpinned by expectations for a reduction to the Fed’s quantitative easing program at the outcome of its next policy meeting on January 29 to USD65 billion from the current USD75 billion.
Investors were looking ahead to the Bank of Canada’s rate statement and accompanying monetary policy report on Wednesday, amid concerns that the sluggish inflation outlook will see the bank stick to its recent dovish stance on rates.
Meanwhile, data released on Tuesday showed that Canadian manufacturing sales rose 1% in November, above expectations for a 0.4% increase. Canadian wholesales sales were flat, missing expectations for a 0.4% gain.
Elsewhere, the loonie, as the Canadian dollar was slightly lower against the euro, with EUR/CAD rising 0.18% to 1.4859.
In the euro zone, data on Tuesday showed that the ZEW index of German economic sentiment ticked down to 61.7 this month from 62.0 in December. Analysts had expected an increase to 64.0.
However, the current conditions index rose to a 20-month high of 41.2 this month from 32.4 in December, beating expectations for an increase to 34.1.