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Canadian dollars.Jonathan Hayward/The Canadian Press

The Canadian dollar was ahead 0.28 of a cent to 97.35 cents (U.S.) as the greenback further weakened following the Fed announcement mid-afternoon. However, bond yields were little changed with the benchmark U.S. 10-year Treasury at 2.65 per cent.

The currency had been lower earlier after other data showed that Canadian gross domestic product grew by 0.2 per cent that month. Economists had looked for a 0.3 per cent rise from April.

There has been much speculation surrounding the Fed over the last two months, since chairman Ben Bernanke first mentioned that the central bank could start to taper its $85 billion of monthly bond purchases later this year if economic conditions warrant. This key piece of economic stimulus is credited with keeping long term rates low and fuelling a strong rally on markets.

Statistics Canada reported that gross domestic product grew by 0.2 per cent. Economists had looked for a 0.3-per-cent rise from April.

The growth picture was better in the U.S., where GDP grew at an annualized rate of 1.7 per cent during the second quarter, higher than the one per cent advance that was expected.

There was also some positive news two days before the release of the U.S. government's release of employment data.

Payroll firm ADP reported that private sector employment increased by a better than expected 200,000 during this month. Economists expect the economy cranked out about 190,000 jobs during July.