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Dollar extends gains on mounting rate hike expectations

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Investing.com -

Investing.com - The dollar extended gains to fresh eight-month highs against the other major currencies on Wednesday, as the release of strong U.S. jobs data added to expectations for a December rate hike by the Federal Reserve.

USD/JPY gained 0.47% to 123.44.

Payroll processing firm ADP said U.S. non-farm private employment rose by 217,000 last month, above expectations for an increase of 190,000.

The economy created 196,000 jobs in October, whose figure was upwardly revised from a previously reported increase of 182,000.

The upbeat data added to speculation that the Fed will raise interest rates at its December meeting.

Investors were eyeing a string of U.S. economic reports this week, including Friday's nonfarm payrolls report for further indications on the strength of the economy, as the Fed has said that any decision on interest rates will depend on data.

EUR/USD dropped 0.64% to 1.0564, re-approaching Monday's seven-month trough of 1.0556.

Eurostat said on Wednesday that the euro zone's consumer price inflation increased by 0.1% last month, missing expectations for a gain of 0.2% and following a 0.1% increase in October.

The rate has now been below 1% for 26 straight months, well under the European Central Bank's target of near but just under 2%.

Sentiment on the euro also remained vulnerable amid signals by the ECB over the past weeks that it is ready to implement additional easing measures in order to boost inflation in the euro zone and support growth.

Elsewhere, the dollar was higher against the pound and the Swiss franc, with GBP/USD down 0.86% at 1.4953 and with USD/CHF advancing 0.42% to 1.0298.

Sterling weakened after market research firm Markit and the Chartered Institute of Purchasing & Supply said that their U.K. construction PMI declined to seven-month low of 55.3 last month from a reading of 58.8 in October. Economists had expected the index to fall to 58.2 in November.

The Australian dollar was steady, with AUD/USD at 0.7325, while NZD/USD declined 0.45% to 0.6644.

Earlier Wednesday, data showed that Australia's gross domestic product rose 0.9% in the third quarter, beating expectations for a 0.8% increase. Year-on-year, Australia's economy expanded by 2.5% in the last quarter, above expectations for a growth rate of 2.4%.

Meanwhile, USD/CAD was little changed at 1.3356 after the Bank of Canada left its overnight cash rate unchanged at 0.50%, in line with expectations.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was up 0.50% at a fresh eight-month peak of 100.38.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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