Forexpros – The U.S. dollar fell to a five-month low against its Canadian counterpart on Wednesday, as demand for higher-yielding assets was boosted after the European Central Bank’s second long-term liquidity operation met with robust demand.
USD/CAD hit 0.9871 during early U.S. trade, the pair’s lowest since September 19; the pair subsequently consolidated at 0.9886, shedding 0.67%.
The pair was likely to find support at 0.9805, the low of September 19 and resistance at 0.9956, the session high.
The ECB allotted EUR529 billion in three-year loans to European lenders earlier, after receiving bids from 800 banks, significantly more than in the bank’s first long term refinancing operation late last year.
In December, the EBC issued EUR489 billion in three-year loans to 523 banks, averting a liquidity shortage in the euro zone’s banking system and easing pressure on the region’s bond markets.
The Canadian dollar was also boosted after the US Commerce Department reported that gross domestic product increased at a seasonally adjusted annual rate of 3.0% during the fourth quarter, up from a preliminary estimate of 2.8%.
Analysts had expected the second estimate of U.S. GDP to remain unchanged at 2.8%.
The report said the upward revision was due in part to stronger consumer spending and commercial construction data.
The loonie, as the Canadian dollar is also known, was sharply higher against the euro, with EUR/CAD dropping 0.73% to hit 1.3279.
Market participants were looking to testimony by Federal Reserve Chairman Ben Bernanke on the semi-annual monetary policy report in front of the House Financial Services Committee in Washington later in the day.