The divergent economies of Canada and the United States are being reflected in currency markets Wednesday. The Canadian dollar continues to rise in light of yesterday’s Bank of Canada rate hike.

While the Bank of Canada frets about inflationary pressures, U.S. Federal Reserve chairman, Alan Greenspan, continues to worry about weak consumer spending.

And in Europe, the European Central Bank is widely expected to cut rates when it meets on Thursday.

The loonie traded at US67.92¢, up 0.30¢ after rising 0.22¢ on Tuesday. Meanwhile the euro has risen to four-year highs against the greenback at midday, topping US$1.10. The jump is sparked by doubts rose about America’s commitment to a strong currency and fears of an imminent war against Iraq.

There are no major economic releases in Canada this morning. Later today, U.S. data on the services sector and non-manufacturing supply management, as well as the Fed’s Beige Book –- the central bank’s gauge of the economy, is due out. Meanwhile, futures trading is pretty much flat.

Asian stock markets closed lower overnight, following Tuesday’s losses on Wall Street. Tokyo’s Nikkei average dipped 7.60 points to 8,472.62. In Hong Kong, the Hang Seng Index dropped 72.71 points to 9,109.18.

Markets are also soft in Europe. The FTSE 100 index is down 0.8% on Wednesday, losing 29.1 points to 3,596.2. The German DAX is flat. The Paris CAC-40 is down 0.2%.