Canadian Dollar Strengthens After Inflation Data

The Canadian dollar gained ground against its major counterparts in the European session on Wednesday, as a data showed that nation's inflation was flat in May, reducing chances for a rate cut by the Bank of Canada as other major central banks lower rates.

Data from Statistics Canada showed that the CPI rose 0.3 percent on a seasonally adjusted monthly basis in May, unchanged from the previous month. Economists has expected a 0.1 percent increase.

Core inflation, excluding food and energy, ticked up 0.3 percent in May, after rising 0.2 percent in April.

On an annual basis, consumer prices rose an unadjusted 2.4 percent from 2.0 percent in April. The rate was forecast to increase by 2.1 percent.

The data cheered investors by lessening chances for a Bank of Canada rate cut in the future.

All eyes are on the outcome of the FOMC meeting amid increased expectations for dovish remarks.

With trade tensions threatening global growth, it is expected that the U.S. central bank would follow the lead of the European Central Bank and open the door to future rate cuts.

The currency held steady against its major counterparts in Asian trading, excepting the yen.

The loonie firmed to a 4-week high of 1.4942 against the euro from Tuesday's closing value of 1.4972. The loonie is poised to face around resistance the 1.47 region.

Data from Destatis showed that Germany's producer price inflation slowed in May.

Producer prices climbed 1.9 percent year-on-year in May, after a 2.5 percent increase in April. Economists had expected a 2.2 percent rise.

The loonie that ended yesterday's trading at 1.3376 against the greenback strengthened to a 5-day high of 1.3337. The loonie is likely to challenge resistance around the 1.31 mark.

The Canadian currency hit a session's high of 0.9161 against the aussie, from a low of 0.9204 seen at 8:00 pm ET. At yesterday's close, the pair was worth 0.9198. The next possible resistance for the loonie is seen around the 0.89 area.

Data from Westpac showed that Australia's leading index dropped further in May and remained consistently negative for the past six months.

The Westpac- Melbourne Institute Leading Index that indicates likely pace of economic activity over the next nine months, declined to -0.45 percent in May from -0.49 percent in April.

Reversing from a low of 80.92 touched at 3:00 am ET, the loonie bounced off to hit a 5-day high of 81.33 versus the yen. The loonie is seen finding resistance around the 83.5 level.

Data from the Ministry of Finance showed that Japan had a merchandise trade deficit of 967.1 billion yen in May.

That exceeded expectations for a shortfall of 1,207.0 billion yen following the 110.9 billion yen deficit in April.

Looking ahead, European Central Bank President Mario Draghi will give closing remarks at the ECB Forum on Central Banking in Sintra at 10:00 am ET.

At 2:00 pm ET, the Fed announces its decision on interest rate. Economists widely expect it to keep federal funds rate at 2.25 - 2.50 percent.