Dollar Extends Slide As Economy Contracts
29 May 2015 - 11:37PM
RTTF2
The U.S. dollar continued to be weaker on Friday, after data
showed that U.S. economic activity contracted for the first time in
a year in the first quarter of 2015.
Revised data released by the Commerce Department showed that the
gross domestic product fell by 0.7 percent in the first quarter
compared to the previously reported 0.2 percent uptick. The drop
came on the heels of a 2.2 percent increase in the fourth
quarter.
The revised decrease in GDP in the first quarter was still
slightly smaller than the 0.8 percent drop expected by
economists.
The U.S. consumer sentiment and Chicago-area business activity
are due out shortly, which may offer further clues about the state
of economy.
The greenback has been rallying this week as positive economic
data supported hopes that Federal Reserve may start raising rates
around September. Nevertheless, the greenback was trading mixed on
Thursday.
In Asian trading, the currency was steady against the euro and
the franc but fell against the yen and the pound.
In European trading, the greenback depreciated by 0.35 percent
to hit a weekly low of 0.9392 against the franc, compared to
yesterday's closing value of 0.9425. The next possible support for
the greenback-franc pair may be located around the 0.92 zone.
Data published by the State Secretariat for Economic Affairs
revealed that the Swiss economy shrank unexpectedly in the first
quarter largely due to weak exports.
Gross domestic product fell 0.2 percent sequentially in the
first quarter, reversing the prior quarter's 0.5 percent
increase.
The greenback declined to a 4-day low of 1.0996 against the
European currency, down by 0.46 percent from Thursday's closing
quote of 1.0946. Next key support for the greenback is likely seen
around the 1.10 region.
Preliminary figures from the statistical office Destatis showed
Germany's retail sales increased at a faster-than-expected pace in
April, after declining in the previous two months.
Retail sales climbed a seasonally and calender-adjusted 1.7
percent month-over-month in April, in contrast to a 1.4 percent
decline in March.
Reversing from an early nearly 3-week high of 1.5235 against the
pound, the greenback dropped to 1.5295. At Thursday's close, the
pair was valued at 1.5310. Continuation of the greenback's
downtrend may take it to a support around the 1.54 region.
On the flip side, the greenback remained firmer against the yen,
trading around yesterday's closing value of 123.94. This may be
compared to an early low of 123.60.
Data from the Ministry of Internal Affairs and Communications
showed that Japan's consumer prices increased at a slower rate in
April compared to the previous month.
The consumer price index were up 0.6 percent on year in April,
slower than the previous month's 2.3 growth.
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