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Dollar Rising On Light Data Day

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The dollar is gaining ground against its major rivals Wednesday afternoon. While things remain light on the economic front, investors are keeping a close eye on Washington.

Senate leaders announced today that they have reached a bipartisan agreement on a two-year budget deal. However, the plan will still need to obtain approval in the House of Representatives.

The European Commission raised its growth projections for the euro area citing stronger cyclical momentum in Europe and better than expected pick-up in global economic activity and trade.

In the Winter Economic Forecast, the commission said the currency bloc will grow 2.3 percent in 2018, up from the previous projection of 2.1 percent. Likewise, the forecast for next year was upgraded to 2 percent from 1.9 percent.

Risks to this growth forecast remain broadly balanced, the commission said. Downside risks were related to uncertain outcome of the Brexit negotiations and a shift towards more inward looking and protectionist policies.

Further, EU observed that headline inflation will continue to reflect the significant influence of energy prices and is forecast to rise moderately.

Inflation is forecast to remain at 1.5 percent in 2018 and to increase to 1.6 percent in 2019.

The dollar has climbed to a 2-week high of $1.2275 against the Euro Wednesday afternoon, from an early low of $1.2405.

Germany's industrial production declined in December but the momentum was strong throughout the year 2017. Industrial output slid 0.6 percent month-on-month in December, in contrast to a revised 3.1 percent rise in November, data from Destatis showed Wednesday. Output was forecast to drop 0.5 percent.

French foreign trade gap narrowed notably in December, as exports grew much faster than imports, data from the customs office showed Wednesday. The trade deficit fell to EUR 3.5 billion in December from EUR 5.6 billion in November. Moreover, this was the lowest trade surplus of the year.

The French current account gap widened slightly in the three months ended December, data from the Bank of France showed Wednesday. The current account deficit rose to EUR 6.7 billion in the fourth quarter from EUR 6.2 billion in the third quarter.

The buck has risen to around $1.3875 against the pound sterling this afternoon, from a low of $1.3992 this morning.

UK house prices decreased for the second straight month in January, data from the Lloyds bank subsidiary Halifax and IHS Markit showed Wednesday. House prices fell unexpectedly by 0.6 percent in January from December, when they were down 0.8 percent. Prices were forecast to climb 0.2 percent.

The greenback rose to a high of Y109.674 against the Japanese Yen Wednesday, but has since eased back to around Y109.315.

Japan's leading index declined more-than-expected at the end of the year, preliminary figures from the Cabinet Office showed Wednesday. The leading index, which measures the future economic activity, dropped to 107.9 in December from 108.2 in November. Economists had expected the index to fall to 108.1.

Total labor cash earnings in Japan increased for the fifth straight month in December, and at a faster-than-expected pace, preliminary report from the Ministry of Health, Labor and Welfare showed Wednesday.

Gross earnings climbed 0.7 percent year-over-year in December, slower than the 0.9 percent rise in November. However, that was above the 0.5 percent increase economists had forecast.

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