OTTAWA (dpa-AFX) - The U.S. dollar shed ground against its major counterparts on Wednesday, with traders reacting to data on UK consumer price inflation, the interest rate hike in Canada, and looking ahead to the European Central Bank's monetary policy announcement on Thursday.
In U.S. economic news, Data from the Labor Department said the producer price index for final demand shot up by 1.4% in March after advancing by an upwardly revised 0.9% in February.
Economists had expected producer prices to jump by 1.1% compared to the 0.8% increase originally reported for the previous month.
Energy prices led the way higher, skyrocketing by 5.7% during the month, while food prices also spiked by 2.4%.
With the bigger than expected monthly increase, the annual rate of producer price growth accelerated to a record high 11.2% in March from 10.3 percent in February.
The dollar index, which climbed to 100.52 in the Asian session, dropped to 99.83 around noon and was hovering around 99.90 a little while ago, down 0.44% from the previous close.
Against the Euro, the dollar has weakened to $1.0889 from $1.0829.
The dollar is trading at $1.3115 against Pound Sterling, easing from $1.3002. U.K. consumer price inflation advanced to 7% in March from 6.2% in February, the Office for National Statistics said. The rate was forecast to climb to 6.7%.
This was the highest annual inflation in the National Statistics series, which began in January 1997. It was also the highest rate in the historic modeled series since March 1992, when it stood at 7.1%.
The dollar is stronger against the Japanese currency, fetching 125.68 yen per unit, as against 125.39 yen Tuesday evening.
Against the Aussie, the dollar is trading at 0.7452, little changed from the previous close of 0.7453.
The Swiss franc is at CHF 0.9348 against the dollar, weakening from CHF 0.9327.
The Loonie is stronger against the dollar at C$ 1.2563, gaining from C$ 1.2643, on higher oil prices and the rate hike by the Bank of Canada. As widely expected, the Bank of Canada today hiked interest rates by 50 basis points to 1% to combat rising inflation. It is the biggest single hike by the central bank in two decades.
The bank also said that it would allow government bonds it bought during the pandemic to roll off as they mature, beginning what is known as quantitative tightening.
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