Canadian Dollar Rises On Higher Oil Prices After API Data

The Canadian dollar erased its early losses against its major rivals in the European session on Wednesday, as oil prices advanced following an industry data showing a draw in the U.S. crude stockpiles last week.

Crude for January delivery rose $0.30 to $57.44 per barrel.

Data from the American Petroleum Institute showed that U.S. stockpiles fell by 7.4 million barrels for the week ended December 8. This was much higher than the 3.8-million barrel drawdown expected by economists.

Investors await official data from the Energy Information Administration due at 10:30 am ET.

Also in focus is the U.S. Federal Reserve's monetary policy decision later in the day.

At its final meeting of the year, the Federal Reserve is widely expected to raise interest rates by a quarter-point. The investors are likely to keep a close eye on the accompanying statement as well as outgoing Fed Chair Janet Yellen's press conference for clues about the outlook for future rate hikes.

The currency showed mixed performance in the Asian session. While it held steady against the euro and the yen, it fell against the aussie. Against the greenback, the currency rose.

The loonie recovered to 1.2855 against the greenback, 1.5093 against the euro and 88.17 against the yen, from its early lows of 1.2880, 1.5133 and 88.04, respectively. If the loonie rises further, it may locate resistance around 1.27 against the greenback, 1.50 against the euro and 89.00 versus the yen.

Having dropped to near a 2-week low of 0.9742 against the aussie at 9:30 pm ET, the loonie reversed direction and advanced to 0.9721. The next possible resistance for the loonie is seen around the 0.96 level.

Looking ahead, U.S. consumer prices for November are set for release in the New York session.