Dollar Rides Euro, Loonie Weakness Higher
The U.S. dollar inched higher against a basket of major currencies Wednesday on a slump in the euro. But gains in the greenback were limited somewhat as the Canadian dollar moved off lows after the Bank of Canada governor left the door open to future rate hikes
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.36% to 97.675.
USD/CAD rose 0.39% to C$1.3474, but eased from its highs of C$1.3521, after Bank of Canada Governor Stephen Poloz suggested that a rate hike was more likely rather than a cut if growth forecasts of Canadian GDP bouncing back to 2.2% by the end of 2020 are correct.
The less dovish remarks comes after the Bank of Canada left its target rate unchanged at 1.75% and dropped its bias for future rate hikes, citing concerns about economic growth.
“Governing Council judges that an accommodative policy interest rate continues to be warranted,” the new policy statement says. “We will continue to evaluate the appropriate degree of monetary policy accommodation as new data arrive.”
The dollar was also supported by a drop in the euro as German business sentiment unexpectedly fell in April, raising fears that a significant rebound in euro area economic growth in the second half of the year is unlikely.
EUR/USD fell 0.33% to $1.1188.
GBP/USD fell 0.06% to $1.2929 after Conservative lawmakers decided Wednesday against tweaking leadership rules that would have allowed a fresh attempt to oust U.K. Prime Minister Theresa May.
The move comes as lawmakers within the prime minister's party call on her to step down as Brexit talks with opposition leader Jeremy Corbyn have reportedly hit a snag.
USD/JPY rose 0.08% ahead of the Bank of Japan's monetary policy announcement due later today.
The central bank is expected to stand pat on monetary policy, but its inflation and GDP projections will likely garner attention. Reuters reported last week that CPI is not expected to approach the Bank's 2.0% target by the end of the forecast period.