U.S. Dollar Strength Fades Amid Battle Between U.S. Growth and Geopolitics
The U.S. dollar received a boost on Thursday after data showed that the American economy registered its strongest annual growth in 12 years, but geopolitical concerns held the greenback in check, dropping back towards the unchanged mark.
At 11:51 PM ET (16:51 GMT), the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, dropped 0.02% to 96.02, off an intraday high of 96.20.
The Bureau of Economic Analysis said Thursday that gross domestic product registered a seasonally-adjusted annual rate of 2.6% growth in the final three months of 2018, in line with expectations for it to drop from a rate of 3.4% in the third quarter.
Although a significant slowdown from the explosive expansion seen in the third quarter, annual growth for 2018 still settled at a strong reading of 3.1%, marking the first time since 2005 that annual growth has topped 3%.
The data was enough to initially push the U.S. dollar higher, but enthusiasm began to fade as concern over the fact that U.S. President Donald Trump walked away from his summit with North Korean leader Kim Jong-Un without a deal prevailed in markets.
In forex pairs, the safe-haven Swiss franc showed strength against the greenback on the back of more weak data out of China overnight and comments from U.S. Trade Representative Robert Lighthizer who said it was too early to predict an outcome in U.S.-China trade negotiations. USD/CHF was last down 0.39% at 0.9974.
The pound pulled back from a 7-month high against the U.S. dollar that was reached on Wednesday as U.K. Prime Minister Theresa May expressed confidence that a no-deal Brexit could be avoided.
GBP/USD dropped 0.26% to 1.3272, off Wednesday’s intraday peak of 1.3349, its highest since July 9.