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Dollar At Near 2-month Low Versus Euro After U.S. GDP Downward Revision

The U.S. dollar fell sharply against the euro, touching nearly a 2-month low, in the European session on Thursday, after a data showed that the economy contracted more than initially estimated in the first quarter due to the impact of economic shutdown amid coronavirus crisis.

Data from the Commerce Department showed that U.S. gross domestic product fell more than the flash estimate in the first quarter.

The real gross domestic product decreased at an annual rate of 5.0 percent in the first quarter compared to the previously reported 4.8 percent drop.

Economists had expected the economy to shrank by 4.8 percent.

Data from the Labor Department showed a continued decrease in first-time claims for U.S. unemployment benefits in the week ended May 23.

The Labor Department said initial jobless claims dropped to 2.123 million, a decrease of 323,000 from the previous week’s revised level of 2.446 million.

Economists had expected jobless claims to fall to 2.100 million from the 2.438 million originally reported for the previous week.

Separate data from the Commerce Department showed that new orders for U.S. manufactured durable goods showed a substantial decrease in the month of April.

The report said durable goods orders plunged by 17.2 percent in April following a revised 16.6 percent nosedive in March.

Economists had expected durable goods orders to plummet by 19.0 percent compared to the 14.4 percent slump originally reported for the previous month.

The greenback dropped to 1.1040 against the euro, its lowest level since March 31. Next key support for the greenback is seen around the 1.12 mark.

Survey data from the European Commission showed that Eurozone economic confidence improved in May from a record low.

The economic sentiment index rose to 67.5 in May from 64.9 in the previous month. However, the reading was below economists’ forecast of 70.3.

The greenback edged down to 1.2304 against the pound, from a high of 1.2234 logged at 6:00 am ET. The greenback is likely to challenge support around the 1.26 level.

Bank of England policymaker Michael Saunders said the UK economy could slip into a ‘lowflation trap’ in case of too little stimulus.

“If we overdo the stimulus somewhat and then find the economy recovers strongly, we have ample tools and time to tighten policy again before persistent excess demand and inflation become a problem,” Saunders said in a webinar.

The U.S. currency remained lower against the yen, with the pair trading at 107.74. The greenback is poised to find support around the 104.00 level.

The greenback pulled back to 0.9679 against the franc, after rising to 0.9719 at 6:15 am ET. Should the greenback slides further, it may find support near the 0.94 level.

The greenback reached as low as 0.6655 against the aussie and 0.6216 against the kiwi, compared to Wednesday’s closing values of 0.6619 and 0.6186, respectively. On the downside, 0.70 and 0.64 are likely seen as the next support levels for the greenback against the aussie and the kiwi, respectively.

In contrast, the greenback was trading in a positive territory against the loonie, with the pair worth 1.3765. The pair was valued at 1.3752 at Wednesday’s close.

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