Dollar At Near 2-month Low Versus Euro After U.S. GDP Downward Revision
May 28 2020 - 5:42AM
RTTF2
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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