Investing.com - The dollar added to gains against the other major currencies on Wednesday after strong U.S. data bolstered sentiment on the outlook for the economic recovery.
EUR/USD hit session lows of 1.3581, the weakest since January 10 and was last down 0.60% to 1.3596.
The dollar strengthened across the board after data showed that manufacturing activity in the Empire State expanded at the fastest pace since May 2012 this month.
The Federal Reserve Bank of New York said that its general business conditions index jumped to 12.51 in January from an upwardly revised 2.22 in December. Analysts had expected the index to rise to 3.75.
A separate report showed that U.S. producer price inflation rose at the strongest rate in six months in December.
Producer price inflation rose 0.4% last month, the biggest increase since June, recovering from a 0.1% decline in November and was 1.2% higher from a year earlier.
Core PPI was up 0.3% in December and rose 1.4% on a year-over year basis, compared to expectations for a monthly increase of 0.1% and an annual gain of 1.3%.
The reports came after data on Tuesday showed that U.S. retail sales posted a larger than expected gain in December.
The strong data reinforced expectations that the U.S. economic recovery will continue to deepen going into this year and offset lingering concerns over last week’s surprising weak U.S. nonfarm payrolls report.
The common currency shrugged off a report showing that the euro zone’s trade surplus widened to EUR16.0 billion in November from a surplus of EUR14.3 billion in October, due to a decline in imports.
Elsewhere, Germany’s Federal Statistics Office said Wednesday the economy expanded by just 0.4% in 2013 after increasing by 0.7% in 2012, as the crisis in the euro zone acted as a drag on growth. Analysts had been expecting growth of 0.5%.
USD/JPY hit highs of 104.59, the strongest since January 10 and was last up 0.24% to 104.46. On Tuesday the pair rallied 1.1%, recovering from a one-month low of 102.84 struck on Monday.
The dollar extended gains against the pound and the Swiss franc, with GBP/USD down 0.56% to 1.6354, and USD/CHF advancing 0.73% to 0.9090.
The Australian dollar retreated further from Monday’s one-month highs, with AUD/USD down 0.37% to 0.8931, while NZD/USD lost 0.32% to trade at 0.8354.
Elsewhere, USD/CAD eased back from session highs of 1.0992, the strongest level since September 2009, with the pair last down 0.16% to 1.0928.
The Canadian dollar remained under heavy selling pressure after dire Canadian employment data last week cemented expectations that the Bank of Canada will stick to its dovish stance on interest rates at its upcoming policy meeting next week.
The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.54% to 81.17.