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Forex – Nearly 1% Slump in USD/CAD Keeps Lid on Dollar Rally

© Reuters.  © Reuters.

Investing.com – The rally in the dollar against its rivals paused on Wednesday pressured by a sharp rise in the Canadian dollar while weaker wholesale inflation data scaled back investor optimism for a faster pace of rate hikes.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 0.02% to 92.92. The greenback fell from an intraday high of 93.26.

The Labor Department said on Wednesday its producer price index for final demand fell by 0.1% last month after, confounding expectations for a 0.2% rise. In the 12 months through August, the PPI rose 2.6% after rising 3% in March.

The downbeat economic report led some analysts to suggest that wholesale inflation was unwinding as the recent string of upbeat PPI reports were mostly driven by a recovery from hurricanes seen in the United States last year.

“We’ve seen big PPI gains in six of the last nine months that were at least initially lifted by hurricane disruptions,” Action Economics said in a note to clients. “Firmness past the disruption period is slowly unwinding now.”

A surge in the Canadian dollar on the back of higher oil prices also weighed on upside momentum in greenback, pressuring USD/CAD to C$1.2833, down 0.90%.

Elsewhere, GBP/USD rose 0.08% to $1.3559 ahead of Bank of England rate decision on Thursday.

EUR/USD fell 0.08% to $1.1856 after giving up gains as the prospect of fresh elections in the Italy weighed.

USD/JPY rose 0.60% to Y109.77 as the fallout from the United States’ decision to leave the Iran nuclear deal failed to garner demand for safe-haven yen.

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