Dollar Extends Slide As U.S. Economy Grows Less Than Expected
July 29 2016 - 5:29AM
RTTF2
The U.S. dollar continued to be lower against its key
counterparts in European deals on Friday, as the U.S. economy
expanded less than estimates in the second quarter.
The initial estimate released by the Commerce Department showed
that gross domestic product climbed by 1.2 percent in the second
quarter following a downwardly revised 0.8 percent increase in the
first quarter.
Economists had expected GDP to jump by 2.6 percent compared to
the 1.1 percent growth that had been reported for the previous
quarter.
Slowing growth could be a concern to Federal Reserve officials
who had acknowledged "diminishing near-term downside risks" in the
Fed statement and plan to raise rates this year.
Traders now await the University of Michigan's final consumer
sentiment index for July, which is expected to be revised upward to
90.6 from the preliminary reading of 89.5.
The greenback has been falling in the Asian session, extending
its post-FOMC losses, as the Fed statement appeared to reduce a
possible interest rate increase occurring in September.
Thursday, the dollar shed 0.2 percent against the euro, 0.5
percent against the franc and 0.10 percent against the pound as the
Fed gave little clues about a near-term rate hike.
The greenback declined to a 2-week low of 1.1139 against the
euro, compared to 1.1075 hit late New York Thursday. The greenback
is seen finding support around the 1.125 zone.
Flash estimate from Eurostat showed that Eurozone consumer
prices increased for the second straight month in July.
Consumer prices climbed 0.2 percent year-on-year, following a
0.1 percent rise in June. Prices were expected to rise again by 0.1
percent.
The greenback depreciated to 0.9721 against the Swiss franc, its
lowest since July 5. This marks a 0.9 percent decline from
Thursday's closing value of 0.9809. On the downside, 0.96 is likely
seen as the next support level for the greenback-franc pair.
Survey results by the think tank KOF showed that its economic
barometer unexpectedly rose for a second straight month in July to
its highest level in four months, signaling sustained favorable
prospects.
The KOF Economic Barometer rose to 102.7 from 102.6 in June,
which was revised from 102.4. Economists were looking for a lower
score of 101.4.
The greenback fell back to 102.88 against the Japanese yen,
hovering near its Asian session's 2-week decline of 102.71. This
may be compared to a 2-day high of 105.61 hit at 11:30 pm ET.
Continuation of the greenback's downtrend may see it challenging
support around the 100.00 mark.
The Bank of Japan raised the target for exchange-traded fund
purchases, while holding its interest rate.
The bank will increase the purchases of exchange-traded funds so
that their outstanding amount will rise at an annual pace of about
JPY 6 trillion.
The greenback was trading lower at 1.3219 against the pound, off
its early high of 1.3148. If the greenback continues decline, it
may test support around the 1.33 region.
Data from the Bank of England showed that U.K. mortgage
approvals declined to a one-year low in June.
The number of mortgages approved in June fell to 64,766 in June
from 66,722 in May. This was the lowest since May 2015, when
approvals totaled 64,174. It was forecast to drop to 65,500 in
June.
The greenback slipped to a 2-day low of 0.7563 against the
aussie and a 2-week low of 0.7173 against the kiwi, reversing from
its previous highs of 0.7493 and 0.7068, respectively. Extension of
the greenback's downtrend may see it challenging support around
0.765 against the aussie and 0.73 against the kiwi.
Retreating from a high of 1.3186 hit at 4:00 am ET, the
greenback edged down to 1.3120 against the loonie. The greenback is
poised to test support around the 1.30 mark.
Looking ahead, Chicago manufacturing survey results and
University of Michigan's final consumer sentiment for July are to
be released shortly.
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