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Canadian dollar edges lower against USD as greenback broadly climbs

Against a basket of its rivals, the dollar was up 0.13 per cent at 97.12, its highest level since June 2017.


Canadian dollar edges lower against USD as greenback broadly climbs
"There seems to be a little bit of a disconnect between how the U.S. has really fared over the last two years and what's going on outside," Trang said. (Image Credit: Twitter)

The dollar edged up to a fresh 16-month high against a basket of key currencies on Wednesday on the back of continued U.S. economic strength, putting the greenback on pace for a seventh straight month of gains.

Against a basket of its rivals, the dollar was up 0.13 per cent at 97.12, its highest level since June 2017.

"If you look at the G10 as well as some of the emerging markets, they have been battered quite a bit over the last six months and the movements over the past two, three weeks has not helped," said Minh Trang, senior FX trader at Silicon Valley Bank in Santa Clara, California.

"Especially if you look at currencies like the euro or the pound," Trang added.

The euro slipped 0.26 per cent against the greenback, while the dollar climbed 0.08 per cent against the Japanese yen. Both currencies have shed more than 2 per cent in October.

Less-than-stellar economic news from the eurozone region has weighed on the euro, while Brexit-related worries have hurt the British pound.

The dollar, meanwhile, has enjoyed a boost from robust economic reports, including data last week which showed the U.S. economy slowed less than expected in the third quarter.

The ADP national employment report on Wednesday showed that U.S. private sector payrolls increased by the most in eight months in October, suggesting overall job growth accelerated this month after Hurricane Florence weighed on restaurant and retail employment in September.

The U.S. Federal Reserve increased interest rates in September for the third time this year and is expected to raise rates again in December, even as the European Central Bank's plan to raise rates late next year may be challenged by alarmingly slow growth in the eurozone region.

"There seems to be a little bit of a disconnect between how the U.S. has really fared over the last two years and what's going on outside," Trang said.

Part of the discord may have to do with the trade-related tensions, Trang said. Investors view the United States to be in better shape than its trading rivals to whether a trade war.

The dollar was 0.08 per cent higher against the Japanese yen after the Bank of Japan kept monetary policy steady on Wednesday, reinforcing views that the central bank is in no rush to trim its massive stimulus.

Sterling rose off a 10-week low as investors turned their attention to a Bank of England monetary policy meeting on Thursday when it is expected to keep interest rates on hold and detail conditions necessary for policy tightening.

The Canadian dollar edged lower against its U.S. counterpart on Wednesday as the greenback broadly climbed, offsetting data that showed a surprise strengthening of the domestic economy in August.

(With inputs from agencies.)


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