Canadian Dollar Advances As U.S. Drops Contentious Auto-content Demand

The Canadian dollar advanced against its major counterparts in the Asian session on Wednesday, following news that the Trump administration had abandoned contentious demand about auto-content, clearing key roadblock in NAFTA renegotiation.

The Trump administration has dropped a contentious demand that all vehicles made in Canada and Mexico for export to the United States contain at least 50 percent US content, according to a report by Canada's Globe and Mail.

Earlier, the U.S. had proposed content requirement of at least 50 percent and to raise existing requirement for North American content in autos from 62.5 percent to 85 percent.

Meanwhile, Asian shares advanced ahead of the Federal Reserve's monetary policy decision later in the day.

The Fed is widely expected to hike interest rates for the first time this year by 25 basis points when it concludes its two-day policy meeting at 2:00 pm ET.

Investors are also likely to keep an eye on the accompanying statement for clues about the outlook for future rate hikes.

New Fed Chairman Jerome Powell's first press conference as head of the central bank is also likely to attract considerable attention.

The loonie climbed to 6-day highs of 1.3011 against the greenback and 81.83 against the yen and held steady thereafter. The loonie ended Tuesday's trading at 1.3071 against the greenback and 81.49 against the yen.

The loonie advanced to an 8-day high of 1.5945 against the euro and near a 2-week high of 1.0015 against the aussie and held steady thereafter. The loonie finished Tuesday's trading at 1.6001 against the euro and 1.0042 against the yen.

Looking ahead, U.K. claimant count rate for February, ILO jobless rate for the three months to January and public sector finance data for February are due in the European session.

In the New York session, U.S. current account data for the fourth quarter and existing home sales for February are scheduled for release.

At 2:00 pm ET, the Fed announces decision on interest rate. Economists widely expect the Fed to raise benchmark rate by 25 basis points to 1.75 percent from the current 1.50 percent.