TORONTO - The Canadian dollar was slightly higher as manufacturing sales registered a healthy increase in October and hit a 17-month high.

The loonie was ahead 0.01 of a cent to 94.47 cents US as Statistics Canada reported that sales increased by one per cent in October to $50.1 billion. Economists had expected a decline of 0.3 per cent.

The agency said that with this gain, sales reached their highest level since May 2012. The sales increase in October was mostly caused by higher sales in the food industry. Sales also rose notably in the chemical industry.

In the United States, lower gasoline costs kept overall U.S. consumer prices unchanged in November.

That showing followed a 0.1 per cent decline in October.

The data was released as traders hope for clarity on what the U.S. Federal Reserve may decide to do about cutting back on asset purchases as its policy makers meet Tuesday and Wednesday.

Traders are playing it cautious ahead of an announcement expected mid-afternoon Wednesday as they weigh the odds of the Fed starting to taper its monthly US$85 billion of bond purchases. This third episode of quantitative easing by the Fed has underpinned a strong rally in many stock markets while keeping long-term rates low.

Opinion is split with many analysts believing incoming chair Janet Yellen may hold off until March, allowing the Fed to collect more data pointing to a steadily improving economic climate and particularly job creation.

Low inflation numbers will also play on Fed decision making. Analysts suggest that low inflation only registering a shade over one per cent at an annual rate is the prime reason why the Fed might decide to postpone tapering, as other recent data have been overwhelmingly positive.

Commodity prices retreated amid concerns that economies would falter if the Fed tapers.

The January crude contract on the New York Mercantile Exchange slipped seven cents to US$97.41 a barrel.

March copper was unchanged at US$3.33 a pound while February bullion fell $12.70 to US$1,231.70 an ounce.

News from © The Canadian Press, 2013