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US dollar traded lower against its Canadian counterpart on Tuesday, after US consumer prices registered an insignificant increase, while the outcome of the monthly policy meeting by the Federal Reserve Bank was put into investors focus.

USD/CAD hit a session low at 1.0302 at 12:30 GMT, after which consolidation followed at 1.0311, losing 0.15% for the day. Support was likely to be found at September 16th low and also a five-week low, 1.0283, while resistance was to be met at September 12th high, 1.0335.

US dollar showed a slight reaction against peers to the consumer inflation report out of the United States. It became clear that the index of consumer prices (CPI) rose at a slower pace than anticipated in the month of August, thus, extending the series of suppressed inflationary data by one more month. This might influence the decision by the Federal Reserve regarding its stimulus at the two-day meeting on monetary policy. The CPI ticked up 0.1% in August compared to July, while expectations pointed a 0.2% gain. Annual CPI slowed down to 1.5% in August from 2.0% in July. The core consumer price index, which does not encompass volatile components such as food and energy costs, also increased by 0.1% in August on a monthly basis, meeting preliminary estimates. Annual core CPI reached 1.8% in August, as it stood at 1.7% a month ago. Despite the fact that this registered increase in consumer prices remained weak in comparison with historic standards, it facilitated inflations movement closer to the targeted level by Fed of annual inflation of 2%. In order to make a decision, the central bank prefers to use another gauge of inflation, the index of prices of consumer expenditures, which demonstrates lower values than the index of consumer prices, evaluated by the Department of Labor.

Meanwhile, sales in Canadian manufacturing sector increased at almost 3.5 times faster pace than projected in July, marking its highest point since February. Overall sales have been supported by sales of jewelry, oil products, coals, processed metals and wooden products. Manufacturing shipments increased by 1.7% in July compared to June, after the 0.1% dip, recorded in June, according to revised data. Experts from Royal Bank of Canada had anticipated that sales will advance 0.5%. Another gauge of manufacturing sales, which excludes price changes and is usually used in the evaluation of countrys Gross Domestic Product, rose by 1.1% in July, reaching its highest level since February.

Elsewhere, the loonie, as Canadian dollar is also known, was higher against the euro, with EUR/CAD cross decreasing 0.28% to trade at 1.3732 at 14:33 GMT. GBP/CAD pair was losing 0.38% to trade at 1.6353 at 14:35 GMT.

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