Canadian Dollar Higher Ahead Of BoC Policy Decision

The Canadian dollar advanced against its major counterparts in the Asian session on Wednesday, as investors awaited the Bank of Canada's interest rate decision that is expected to sound hawkish on the back of high inflation and a drop in the jobless rate.

The bank is expected to leave its interest rate unchanged at 0.25 percent when it will deliver its decision later today.

Economists expect the BoC to hike rates sooner than previously indicated given the strong economic outlook.

Asian markets are mostly higher, as investors awaited the Federal Reserve's monetary policy announcement for more insights about the outlook for rate hikes and the start of the balance sheet reduction.

The Fed ends its two-day policy meeting later today, with investors watching for signals on a liftoff in interest rates in March.

The loonie was trading at a 2-day high of 1.2587 against the greenback, up from yesterday's close of 1.2624. The loonie is seen finding resistance around the 1.23 mark.

The loonie reached as high as 1.4214 against the euro, setting a 5-day high. The currency is poised to face resistance around the 1.40 mark.

The CAD/JPY pair touched a 2-day high of 90.67, compared to Tuesday's closing quote of 90.13. The loonie may find resistance around the 92.00 region, if it rallies again.

The loonie edged higher to 0.9010 against the aussie, from a low of 0.9037 seen at 7:30 pm ET. On the upside, 0.89 is possibly seen as its next resistance level.

Looking ahead, U.S. wholesale inventories, advance goods trade balance and new home sales, all for December, are due in the New York session.

The Bank of Canada will announce its interest rate decision at 10:00 am ET. The BoC is widely expected to keep its policy rate steady at 0.25 percent.

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