Greenback touches 6-year peak vs loonie in early US trade; loonie broadly higher vs euro

On Thursday the U.S. dollar edged higher against its Canadian peer, to trade close to the previous session's nearly six-year high after data showed that U.S. jobless claims fell from a seven-month high last week, lower than analysts had initially anticipated.

USD/CAD hit 1.2387 during early U.S. trade, the session high; the pair subsequently consolidated at 1.2379, gaining 0.31%. The cable was likely to find support at 1.2060, Wednesday's low and resistance at 1.2395, Wednesday's high and a nearly six-year high.

In a report, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending January 17 decreased by 10,000 to 307,000 from the previous week’s total of 317,000.

Economists had expected initial jobless claims to decline by 17,000 to 300,000 last week.

Meanwhile, the Canadian dollar remained under pressure after the Bank of Canada on Wednesday unexpectedly lowered its overnight target rate to 0.75% from 1.0% previously, saying that the rout in oil prices over the past six months would be negative for growth and underlying inflation in Canada.

The BoC added that it now expects economic growth to slow to about 1.5% and the output gap to widen in the first half of 2015.

The Canadian dollar traded higher against the euro, with EUR/CAD declining 0.87% to 1.4202.

The common currency weakened broadly after the European Central Bank launched a large scale quantitative easing program in an attempt to combat slowing growth and the risk of deflation in the euro area.

Mario Draghi, ECB President, said it will make monthly purchases of €60 billion per month, starting in March and continuing until late 2016.

Draghi admitted the action the ECB took last year was “insufficient” to ward off the threat of deflation in the region. The annual rate of inflation in the euro area fell into negative territory last month, declining 0.2%.

The ECB chief said the risks to the euro area recovery remain to the “downside” but added that today’s action should bolster the outlook. He noted that lower oil prices should help households and support a wider recovery.