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Euro slips to day’s lows after euro zone GDP data

8/1/2017, 6:27:02 PMBasics of Trading
Euro slips to day’s lows after euro zone GDP data

The euro slid to the day’s lows against the U.S. dollar on Tuesday despite data showing that economic growth in the euro zone continued to expand in the second quarter.

EUR/USD was down 0.22% to 1.1811 by 05.11 a.m. ET (09.11 a.m. GMT), after touching a two-and-a-half year high of 1.1845 overnight.

The European Union's statistics office Eurostat said gross domestic product in the euro area rose 0.6% quarter-on-quarter in the three months to July and by 2.1% year-on-year, up from 1.9% in the first quarter.

Economists had forecast growth of 0.6% in the quarter and 2.4% year-on-year.

The solid data did little to alter expectations that the European Central Bank will decide to begin scaling back its asset purchase program in the autumn.

The data came a day after figures showing that headline inflation in the euro zone rose in line with forecasts in July, but underlying inflation rose to the highest in four years.

The annual rate of inflation rose by 1.3% in July, according to a preliminary reading from Eurostat.

Core inflation, which strips out volatile components and is seen as a more reliable gauge of inflationary pressures, rose to 1.2%. It was the highest reading since August 2013.

The euro was lower against sterling, with EUR/GBP down 0.32% to 0.8931.

The pound was boosted after data showing that UK factory growth rebounded in July on the back of a surge in new exports.

Meanwhile, the U.S. dollar was wallowing near 14-month lows against a currency basket after falling for a fifth consecutive month in July in what is its longest losing streak since 2011.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 92.78, after falling as low as 92.64 on Monday, the weakest since May 2016.

The index fell 2.88% in July, its fifth straight monthly decline and its largest monthly percentage decline since March 2016.

Deepening political turmoil in Washington and diminished expectations for a third rate hike by the Federal Reserve this year have pressured the dollar lower.