On Wednesday, the US dollar rose against the Canadian dollar, once again approaching the recent 11.5-year high, after the release of positive data on the housing sector, and on the eve of the US Federal Reserve's decision on interest rates.
In early US trade, USD/CAD reached 1.3779, the highest since Monday; the pair subsequently consolidated at 1.3771, gaining 0.27%.
The pair is likely to receive support at 1.3668, Tuesday's low, and resistance at 1.3781, Monday's high and 11.5-year high.
The US Commerce Department announced that the volume of new housing in the US last month jumped by 10.5% to 1.173 million units, from 1.062 million units October. Analysts had expected a growth by 6.6% to 1.135 million.
Meanwhile, the volume of permits issued for housing construction rose 11.0% to 1.289 million units from 1.161 million October, confounding market forecasts of decline by 1.0% to 1.150 million units.
Most investors predict that at today's meeting the Fed will decide to raise rates for the first time since June 2006.
Rising interest rates make the dollar more attractive to investors in long term, however, immediately after the rate hike may be sales.
The traders, who expect a rate hike, are now speculating about the pace of tightening monetary policy the Federal Reserve in 2016, after the US central bank's statement that the rate increase will be gradual.
The Canadian dollar fell against the euro, EUR/CAD rose 0.21% to 1.5046.
In the Eurozone it became known that the index of consumer prices increased by 0.2% last month, more than the projected 0.1%. Inflation accelerated in October by 0.1%.
The inflation rate is below 1% for 26 consecutive months, well below the target level of the European Central Bank just below 2%.
The report came after the market research group – Markit said the composite index of business activity (PMI), which combines activity in the sectors of production and services unit, went down from 54.2 in November to 54.0 in December, worse than the forecast of 54.2.
Earlier on Wednesday, Markit said the preliminary index of business activity in the manufacturing sector in Germany rose this month to 53.0 from a final figure of 52.9 in November, and preliminary PMI in the service sector in Germany fell to 55.4 in December from 55.6 in the previous month.