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TOKYO (Reuters) - The dollar was hemmed into a narrow trading range on Friday as traders contemplate the next moves by major central banks ahead of a U.S. Federal Reserve meeting next week.
FILE PHOTO: Sheets of former U.S. President Abraham Lincoln on the five-dollar bill currency are seen through a magnifying glass at the Bureau of Engraving and Printing in Washington March 26, 2015. REUTERS/Gary Cameron
The euro nursed losses after European Central Bank President Christine Lagarde squashed expectations that policymakers will start to consider a tapering of bond purchases due to an improving economic outlook.
Inflation forces Bank of Canada s hand ahead of Fed and ECB bnnbloomberg.ca - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from bnnbloomberg.ca Daily Mail and Mail on Sunday newspapers.
Euro regains poise as data points to stronger recovery
The euro rose on Friday, edging back towards a seven-week high having nursed losses after European Central Bank President Christine Lagarde squashed speculation that policymakers will start to consider a tapering of bond purchases.
Flash purchasing managers’ index numbers for April came in better than expected in the euro zone and supported the view that the region’s economic recovery is accelerating, although the already-stronger euro was little moved by that data. The United States numbers are due at 1345 GMT.
The euro gained 0.3% to $1.2054 while the dollar index, measured against a basket of currencies, was down 0.3% .
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The Bank of Canada sent out a warning to investors this week that inflation still matters.
In a surprise move, it accelerated the timetable for a possible interest-rate increase and began paring back its bond purchases on Wednesday. That made Canada the first major economy to signal its intent to reduce emergency levels of monetary stimulus.
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It’s a turn in policy by Governor Tiff Macklem that shows there’s a limit to how much he’s willing to test the upper boundaries of inflation, with new forecasts showing the central bank expects the biggest persistent overshoot of its 2 per cent target in at least two decades. The question is whether Canada’s situation is unique, or foreshadowing the start of a global exit from stimulus.