The U.S. dollar rose to a two-week high against its Canadian counterpart on Thursday, supported by upbeat U.S. data and news of a potential rate hike by the Federal Reserve by the end of the year, while lower oil prices weighed on demand for the commdity-related Canadian currency.
USD/CAD was up 0.20% at 1.2350 by 09:30 a.m. ET (13:30 GMT), its highest since September 6.
The U.S. Department of Labor reported on Thursday that initial jobless claims unexpectedly declined last week to hit 259,000.
A separate report showed that manufacturing activity in the Philadelphia area increased unexpectedly in September.
As expected, the Fed left interest rates unchanged at the conclusion of its two-day policy meeting on Wednesday.
However, the central bank indicated that one more interest rate hike is likely this year, even though it reduced its outlook for inflation this year from 1.7% to 1.5%, and from 2% to 1.9% in 2018.
The Fed also said it will begin to unwind its $4.5 trillion balance sheet in October. Most assets consist of the Treasurys and mortgage-backed securities the bank acquired under its quantitative easing program.
In Canada, official data on Thursday showed that wholesale sales increased 1.5% in July, compared to expectations for a 0.9% decline.
But the Canadian dollar's gains were capped as oil prices turned lower after Wednesday's disappointing U.S. crude inventories data and as traders remained cautious ahead of a highly-anticipated meeting of the Organization of the Petroleum Exporting Countries on Friday.
The loonie was also lower against the euro, with EUR/CAD gaining 0.40% to 1.4713.
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