TORONTO - The Canadian dollar was higher Wednesday morning as traders look for hints about the pace of rate hikes by the U.S. Federal Reserve. The loonie was gained 0.06 of a cent to 86 cents US ahead of the mid-afternoon release of the Fed's rate announcement. Traders hope the Fed will retain important language in that statement that says short-term rates will stay ultra-low "for a considerable time." It's generally expected the Fed will move to hike rates sometime next year, around mid-2015. But a series of strong economic data points, including November's blowout employment report, have suggested the Fed could move to increase rates from near zero sooner than expected. Meanwhile, inflationary pressures in the United States remain very tame. The consumer price index for November was down 0.3 per cent from the month before. Economists had expected a drop of 0.1 per cent. Inflation rose at an annualized pace of 1.3 per cent. That is well below the two per cent level that the Federal Reserve and most other central banks target. Oil prices continued to head lower as the market continues to sort out a huge supply/demand imbalance that has cut prices by more than 50 per cent since summertime highs. The January crude contract on the New York Mercantile Exchange fell $1.40 to US$54.53. Metals were mixed with March copper down two cents to US$2.84 a pound while February gold gained $7 to US$1,201.30 an ounce.

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