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Dollar continues to wobble as pound and euro hit highs

6/30/2017, 9:38:18 AMBasics of Trading
Dollar continues to wobble as pound and euro hit highs

The dollar fell against a basket of global currencies on Thursday, after a mixed batch of economic data failed to inspire confidence that second-quarter U.S. economic growth would advance as much as hoped.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 0.40% to 95.39.

Economic data showing an upward revision to first-quarter U.S economic growth was offset by jobless claims data that undershot forecasts, fueling concerns of timid second-quarter economic growth.

Gross domestic product increased at a 1.4% annual rate instead of the 1.2% reported last month, the Commerce Department said in its final assessment on Thursday.

Analysts had forecast the final reading of first-quarter GDP growth to remain unchanged at a 1.2% rate.

The better than expected rate of GDP growth, however, was offset by weaker jobs data, after the U.S. Department of Labor reported Thursday that initial jobless claims unexpectedly increased by 2,000 to 244,000 in the week ended June 25, compared to forecasts of a 2,000 decline.

The mixed batch of economic data comes amid heavy selling pressure in the greenback, after its rivals, mainly the pound and euro, continued to surge despite mixed messages on monetary policy from the European Central Bank and the Bank of England.

GBP/USD surged 0.47% to $1.2988, as investors piled into sterling, after Bank of England governor Mark Carney changed his recent loose stance on monetary policy, suggesting that “some removal of monetary stimulus is likely to become necessary”.

EUR/USD hit a 14-month high, rising to $1.1430, up 0.47%, as investors shrugged off comments from European Central Bank sources, who said that the market had misjudged Draghi comments earlier during the week.

USD/CAD hovered above four-month lows of C$1.3025, down 0.11%, pressured by expectations that the Bank of Canada (BoC) is poised to raise interest rates, after BoC governor Stephen Poloz reiterated on Wednesday that rate cuts from 2015 ‘have done their job’.

USD/JPY traded at Y112.05, down 0.21%.