Dollar Rises Despite Weak U.S. GDP Data
April 28 2017 - 5:24AM
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The U.S. dollar rose against its key counterparts in the
European session on Friday, even as a data showed that the U.S.
economic growth slowed more than anticipated in the first three
months of 2017.
Data from the Commerce Department showed that the gross domestic
product increased by 0.7 percent in the first quarter after jumping
by 2.1 percent in the fourth quarter. Economists had expected GDP
to climb by 1.2 percent.
Traders digested comments from President Donald Trump, who
warned of a major conflict with North Korea over its nuclear and
missile programs.
"There is a chance that we could end up having a major, major
conflict with North Korea. Absolutely," Trump said in an interview
with Reuters on Thursday.
Market participants await the University of Michigan's revised
report on consumer sentiment in April, due at 10:00 am ET. The
consumer sentiment index is expected to be unrevised at the
preliminary reading of 98.0.
The greenback held steady against its most major rivals in the
Asian session, as U.S. President Donald Trump's threat of a major
rift between the U.S. and North Korea kept sentiment subdued.
Following a 2-day decline to 1.0947 against the euro at 5:15 am
ET, the greenback bounced off to 1.0908 after the data. At
Thursday's close, the pair was worth 1.0870. The greenback is
likely to locate resistance around the 1.075 region.
Flash data from Eurostat showed that inflation rose to 1.9
percent in April from 1.5 percent in March. Economists had forecast
the annual rate to rise to 1.8 percent.
The headline inflation rate remained within the European Central
Bank's target of 'below, but close to 2 percent'.
The greenback recovered to 0.9926 against the Swiss franc, from
more than a 4-week low of 0.9894 hit at 5:15 am ET. The pair was
valued at 0.9923 when it finished Thursday's deals. On the upside,
1.01 is possibly seen as the next resistance for the greenback.
Survey results from the KOF Swiss Economic Institute showed that
a measure signaling future turning points in the Swiss economy
declined unexpectedly in April to a three-month low, yet the
reading remained above average, suggesting sustained momentum in
the economy.
The KOF leading indicator dropped to 106 from 107.2 in March,
which was revised from 107.6. Economists had forecast a score of
107.5.
The greenback firmed to a 2-day high of 111.72 against the
Japanese yen, coming off from an early low of 111.07. Continuation
of the greenback's uptrend may see it challenging resistance around
the 115.00 area.
Data from the Ministry of Land, Infrastructure, Transport and
Tourism showed that Japan's housing starts grew marginally in
March.
Housing starts grew only 0.2 percent year-on-year in March, but
reversed a 2.6 percent fall in February. Economists had forecast
housing starts to drop again by 2.6 percent in March.
The greenback rose back to 1.2903 against the pound, after
having fallen to a 7-month low of 1.2957 early in the European
session. The next possible resistance for the greenback is seen
around the 1.26 mark.
Preliminary estimate from the Office for National Statistics
showed that the U.K. economy expanded at the slowest pace in a year
at the start of 2017.
Gross domestic product grew only 0.3 percent in the first
quarter from prior three months. This was the slowest rate of
growth since the first quarter of 2016.
The greenback bounced off to 0.6855 against the kiwi and 0.7457
against the aussie, from its early lows of 0.6890 and 0.7485,
respectively. If the greenback extends rise, it may find resistance
around 0.67 against the kiwi and 0.72 against the aussie.
On the flip side, the greenback reversed from an early high of
1.3666 against the loonie and showed choppy trading in the rest of
trading session.
The University of Michigan's final consumer sentiment for April
is set for release shortly.
At 1:15 pm ET, the Federal Reserve Governor Lael Brainard speaks
about Fintech at Northwestern University's Fintech conference, in
Illinois.
The Philadelphia Fed President Patrick Harker delivers a speech
titled "How STEM Can Get You Anywhere," in Washington DC at 2:30 pm
ET.
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