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Forex - Dollar dips as U.S. GDP growth rate disappoints

ForexApr 26, 2013 02:38PM ET
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Investing.com - The U.S. dollar traded largely lower against most major currencies on Friday after U.S. economic growth figures for the first quarter came in less than expected and stoked fears the U.S. economy may be hitting a soft patch.

In U.S. trading on Friday, EUR/USD was up 0.14% at 1.3030.

In the U.S. earlier, the Bureau of Economic Analysis revealed in a preliminary report that the U.S. gross domestic product rose 2.5% in the first quarter, missing expectations for a 3.0% increase though an improvement from a 0.4% rise in the previous quarter.

The news weakened the dollar by fueling sentiments that the Federal Reserve's monetary stimulus programs will stay in place for longer than expected.

Stimulus tools such as the Fed's monthly USD85 billion bond-buying program weaken the greenback to spur recovery.

Elsewhere, the Thomson Reuters/University of Michigan's consumer sentiment index rose to 76.4 in April, from a reading of 72.3 the previous month, beating expectations for an increase to 73.2.

The euro, meanwhile, continued to come under pressure after U.S. investment bank Goldman Sachs said it expected the European Central Bank to trim benchmark interest rates 25 basis points at its monetary policy meeting next Thursday.

The investment bank also cut its 2013 eurozone growth forecast to -0.7% from a previous forecast of -0.5%.

Slumping European industrial output reports, soft service-sector data and eroding business confidence data have many market participants speculating the ECB will move to loosen policy to kick-start recovery.

The greenback, meanwhile, was down against the pound, with GBP/USD trading up 0.34% at 1.5486.

On Thursday, the Office for National Statistics reported that the U.K. gross domestic product expanded 0.3% in the three months to March, beating expectations for a 0.1% gain and avoiding a triple dip recession.

The U.K. economy expanded 0.6% in the first quarter from a year earlier, better than expectations for a 0.3% increase.

The dollar was down against the yen, with USD/JPY down 1.08% at 98.18, and down against the Swiss franc, with USD/CHF trading down 0.23% at 0.9428.

The yen saw demand after the Bank of Japan left interest rates unchanged and made no mention of expanding stimulus programs.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.35% at 1.0165, AUD/USD down 0.12% at 1.0278 and NZD/USD trading down 0.23% at 0.8480.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.42% at 82.55.

Forex - Dollar dips as U.S. GDP growth rate disappoints

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