Canadian Dollar Climbs On Rising Oil Prices

The Canadian dollar rose against its most major counterparts in the European session on Wednesday amid higher oil prices, as investors awaited U.S. Energy Information Administration's data that is expected to show a drop in stockpiles last week.

Economists expect crude inventories to fall by 2.928 million barrels for the week ended July 23, compared to a build of 2.108 million barrels in the previous week.

Further underpinning oil prices were the American Petroleum Institute's data showing a bigger than expected drop in U.S. crude inventories last week.

Data from the API showed that U.S. crude stocks fell by 4.7 million barrels for the week ended July 23, compared to analysts' expectations for a 2.9 million drop.

The Fed meeting will be in focus as markets await clues on the central bank's QE tapering plans amid rising inflation.

Data from Statistics Canada showed that inflation rose 0.1 percent on a seasonally adjusted monthly basis in June, after a gain of 0.4 percent in the previous month.

Core CPI, excluding food and energy, fell 0.1 percent, after rising 0.4 percent in May.

The loonie rose to 1.4826 against the euro and 87.64 against the yen, off its early low of 1.4895 and a 1-week low of 87.05, respectively. The loonie is seen finding resistance around 1.47 against the euro and 89.00 against the yen.

The loonie appreciated to more than a 1-year high of 0.9216 against the aussie, from an early 5-day low of 0.9279. If the loonie rises further, it may find resistance around the 0.90 level.

In contrast, the loonie pulled back to 1.2602 against the greenback, from a high of 1.2560 seen at 5:15 am ET. On the downside, 1.28 is possibly seen as its next support level.

Looking ahead, the Fed announces its decision on interest rate at 2:00 pm ET. Economists widely expect the federal funds rate to be kept at 0-0.25 percent.