EUR/USD
The euro fell to fresh eight-month lows against the U.S. dollar on Wednesday, falling below the 1.34 level, after data showed that the U.S. economy rebounded strongly in the second quarter. The Commerce Department reported that gross domestic product expanded at an annual rate of 4.0% in the three months to June, outstripping forecasts of 0.3%. The contraction in the first quarter was revised to 2.1% from a previously reported 2.9%. Personal consumption grew 2.5%, well above predictions of 1.9%, the report said, adding to the view that the economic recovery is gaining traction. The report came on the heels of data showing that the U.S. private sector added just 218,000 jobs in July, falling short of forecasts for jobs growth of 230,000. The dollar has strengthened since Fed Chair Janet Yellen said earlier this month that interest rates could rise sooner if the recovery in the labor market continued.
GBP/USD
The pound was steady at one-and-a-half month lows against the broadly stronger dollar on Wednesday, amid growing confidence in the U.S. recovery as investors awaited a preliminary report on U.S. second quarter growth and the outcome of the Federal Reserve’s latest policy meeting later in the day. The U.S. was to release the preliminary estimate on second quarter gross domestic product growth later Wednesday, which was to be followed by the conclusion of the Fed’s latest policy meeting later in the day. The dollar has strengthened since Fed Chair Janet Yellen said earlier this month that interest rates could rise sooner if the recovery in the labor market continued. The greenback received an additional boost in recent sessions as economic data indicated that the recovery is gaining traction. A report by the Commerce Board on Tuesday showed that U.S. consumer confidence rose to the highest level in seven years this month.
USD/JPY
The Japanese yen was unchanged after industrial production data came in weaker than expected on Wednesday. Japanese yen unchanged after industrial output weakens sharply Japanese yen stronger in Asia. Japan June industrial output fell 3.3%, below the 1.2% expected on month, and the first drop in two months. The data sent investors betting that the Federal Reserve on Wednesday will make fresh cuts to its monthly bond-buying program and deliver an upbeat take on the U.S. economy. Fed asset purchases which have stimulated the economy off and on since the 2008 crisis coupled with low interest rates tend to weaken the dollar by sending investors to stocks, while talk of an end to such loose policies often bolsters the U.S. currency.
USD/CAD
The U.S. dollar rose to one-and-a-half month highs against its Canadian counterpart on Wednesday, supported by the release of stronger than expected data on U.S. second quarter growth as markets eyed the Federal Reserve's upcoming policy statement. The Commerce Department reported that gross domestic product expanded at an annual rate of 4.0% in the three months to June, outstripping forecasts of 0.3%. The contraction in the first quarter was revised to 2.1% from a previously reported 2.9%. Personal consumption grew 2.5%, well above predictions of 1.9%, the report said, adding to the view that the economic recovery is gaining traction. The robust data offset a report showing that the U.S. private sector added just 218,000 jobs in July, falling short of forecasts for jobs growth of 230,000. In Canada, official data showed that the raw materials price index rose 1.1% in June, compared to expectations for a 0.6% gain, after a 0.3% fall in May.