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Loonie moves higher while traders digest economic data for direction

Canadian dollars.


The loonie moved higher against the U.S. dollar Wednesday as attention turned to the global economy.

The Canadian dollar remained above parity at $1.0054 (U.S.) as markets closed, ending up 0.29 of a cent.

A sense of caution is overshadowing the optimism that was prevalent in recent sessions. European stock indexes sank and the U.S. dollar rose against the euro, a sign that investors are becoming more fearful.

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An inflation report from the Bank of England surprised economists with a markdown of long-term growth, though it kept its two- to three-year inflation forecast steady.

"The inflation report makes clear further weakness in output cannot automatically be seen as triggering a further policy response," Jens Larsen of RBC Europe said in a note.

"The weaker outlook for potential growth has implications for the fiscal framework: weaker growth means a weaker fiscal outlook, while lower potential output growth means a worse structural fiscal position."

China will release inflation, factory output and retail sales data on Thursday. Analysts expect inflation to fall further, which would give authorities in Beijing room to shore up slowing growth by easing credit without fear of igniting a spike in consumer prices.

In commodities, the September crude contract turned lower in the last minutes of trading on the New York Mercantile Exchange, falling 32 cents to $93.35 a barrel.

September copper moved down 1.9 cents to $3.42 a pound, while December gold rose $3.20 to end trading at $1,616 an ounce.

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