Investing.com - The dollar continued to trade near 13-month highs against a basket of other major currencies on Wednesday, as Tuesday's strong U.S. factory data continued to support, while expectations that the European Central Bank will add more stimulus grew stronger.
The greenback remained supported after strong U.S. factory data on Tuesday added to the view that the economic recovery is gaining momentum.
Investors were looking ahead to the latest U.S. employment report, due for release on Friday, for further indications on the strength of the recovery in the labor market, a key factor in deciding the future path of monetary policy.
EUR/USD edged up 0.08% to 1.3144, after Ukraine's President Petro Poroshenko said he had agreed on a "permanent ceasefire" in eastern Ukraine with Russia.
But the euro's gains were capped by mounting expectations that the ECB will announce quantitative easing measures as a way to shore up growth after the annual rate of euro area inflation slowed to a five year low last month.
Data earlier Wednesday showed that activity in the German and French service sectors slowed in August, while Italy’s service sector contracted, adding to pressure on the bank to act.
A separate report showed that euro zone retail sales fell 0.4% in July, in line with forecasts.
Elsewhere, GBP/USD was little changed, near five-month lows at 1.6479 despite data showing that the U.K. service sector expanded at the fastest rate since November last month.
The pound shrugged off a report showing that the Markit/CIPS Services Purchasing Managers Index rose to 60.5 last month from a reading of 59.1 in July.
The dollar held steady near seven month highs against the yen, with USD/JPY at 105.05, while USD/CHF remained close to 10-month highs at 0.9188.
AUD/USD climbed 0.58% to 0.9328 after data showed that Australia's grew 0.5% in the second quarter, exceeding expectations for 0.4% growth. In the first quarter, Australia's GDP expanded by 1.1%.
On a year-on-year basis, Australia's economy grew 3.1% in the three months to April, compared to expectations for 3.0% growth.
In addition, Reserve Bank of Australia Governor Glenn Stevens signaled earlier at a conference that interest rates are likely to remain unchanged for an extended period of time.
Elsewhere, NZD/USD held steady near six-month lows at 0.8316, while USD/CAD slipped 0.21% to trade at 1.0905.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, dipped 0.07% to 82.93, not far from the 13-month high of 83.07 hit earlier in the session.