The euro and the Canadian dollar were the best performers out of the major currencies in the late European session.

The loonie strengthened after the Bank of Canada announced its policy decision to leave interest rates unchanged at 0.5%. This was widely expected but what boosted the Canadian currency was a less dovish statement from the BoC. Despite some downward revisions to growth this year to 1.3% from a previously projected 1.7%, the statement was not overtly dovish as it said that fundamentals remain in place for a pickup in growth based on expectations for an increase in oil production.

The USD/CAD pair dropped after the BoC statement to a session low of $1.2934, the lowest since July 7. Earlier in the session it had reached a high of $1.3078.

The euro was another strong performer against the greenback in the European session, rising to a high of $1.1119.

The pound lost the $1.33 handle to drop to $1.3200 in late session trading after topping at $1.3336 in the Asian session. Sterling was due for a pullback after a strong rally on the back of the appointment of a new Conservative Party leader. Theresa May will be replacing David Cameron to become the new UK Prime Minister as soon as tonight. The British currency has nevertheless made some recovery after the BREXIT-driven tumble as political uncertainty has been removed following the appointment of a new PM sooner than had been previously expected.

Meanwhile, Thursday could be a volatile day for the pound as the Bank of England is due to hold a policy meeting and many expect the Bank to cut rates by at least 25 basis points to deal with the fallout from BREXIT. The BoE has commented that the UK economy is likely to suffer a slowdown in coming months. Even if the Bank holds rates at 0.5%, dovish minutes are likely to have a negative impact on the pound, while the MPC vote count will also be closely watched.

The yen has stabilized after weakening substantially early in the week on expectations of more stimulus from Japanese Prime Minister Shinzo Abe. As a result, USD/JPY rose close to 105 yen by Tuesday but paused around this level as the government said there would be no helicopter money coming. The pair traded around the mid-104 level by late European session.

Oil prices fell after a report by the US Energy Information Administration (EIA) showed distillate inventories rose from last week and the draw-down in crude oil inventories was smaller. Crude oil inventories are now at 521.8 million barrel after a draw-down of 2.5 million barrels from the previous week versus a 3-million-barrel draw-down expected. US crude prices fell from $46.66 to $45.01 a barrel after the report.