"The BoC emphasized the downside risks to inflation and essentially argued that the U.S. economy should reprice the U.S. dollar higher, while little can be seen yet in terms of the positive impact on Canadian investments and on exports," said Sebastien Galy, currency strategist, at Societe Generale in New York.
"They take a positive spin on inflation and growth over the longer term ...presumably because the Canadian dollar will have weakened so much relative to the U.S. dollar. We continue to target the C$1.15-1.20 region."
The Aussie had stolen the limelight in early trade, rallying against its U.S. counterpart after an unexpected spike in inflation led investors to cut back bets on another interest rate cut. The Aussie was last up 0.5 percent at US$0.8846.
(Read more: UK inflation hits BoE target; first time in 4 years)
The Australian and Canadian dollars are seen weakening in 2014 despite an improving global economy, with their prospects likely to be tied more closely to shifts in monetary policy at home than demand for their commodity exports.
Earlier, the Bank of Japan kicked off the central bank action on Wednesday, holding its policy meeting overnight and retaining its plan for a 60-70 trillion yen annual rise in monetary base. The dollar last traded up 0.1 percent at 104.42 yen.