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Dollar up on positive economic outlook, policy divergence

The U.S. dollar demonstrated broad-based strength on Wednesday, bolstered by more upbeat comments on the U.S. economy by a Federal Reserve official ahead of a European Central Bank meeting that may result in more monetary easing measures.

The euro fell to a fresh 27-month low, the dollar strengthened toward 120 yen and the U.S. dollar index, which measures the greenback against a basket of currencies, hit its highest level in over 5-1/2 years.

More positive news for the U.S. economy and the labor market in particular was reported on Wednesday as U.S. private employers added jobs at a brisk pace, with 208,000 new jobs added, according to the ADP National Employment Report.


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While the ADP data was slightly below expectation, it contrasted against business activity in the euro zone economy that grew less than expected last month.

In the face of falling oil prices, down almost 40 percent since June, New York Federal Reserve Bank President William Dudley said late on Tuesday that for now the decline is a net benefit for U.S. consumers despite the pain it could cause U.S. energy producers.

In late morning New York trade, the euro fell as low as $1.2301, its weakest since late August 2012. It was last trading near $1.2324, down 0.44 percent on the day.

The dollar index, at 89.005, is at its highest since March 2009. Against the Japanese currency, the dollar rose 0.38 percent to 119.62, marking a fresh 7-1/2 year high.

The dollar fell 0.45 percent against the Canadian dollar, trading at C$1.1353 after the Bank of Canada left interest rates unchanged at 1 percent and said economic recovery was broadening but cautioned plunging oil prices was a risk.

—By Reuters

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