News Column

Dollar Holds Ground Despite Rough GDP Report

June 25, 2014

WASHINGTON (Alliance News) - The dollar on Wednesday withstood a report showing that the US economy suffered its biggest decline since the end of Great Recession during the first quarter.

First quarter US GDP decreased 2.9%, compared to the previously estimated 1.0% drop. Economists had expected the revised data to show a 1.8% decrease.

Hurt by brutal winter weather that kept shoppers indoors, it was the worst quarter for economic growth since the first quarter of 2009.

Still, the dollar barely budged versus other major currencies. The buck was steady at USD1.3640 versus the euro, having seen little movement over the past week.

The dollar held its ground versus the sterling after decent gains in the previous session. The pair was at USD1.6950, near the dollar's recent 5-year low of USD1.7050.

Yesterday, Bank of England Governor Mark Carney said that UK interest rates will remain low for the foreseeable future.

Modest weakness left the dollar at Y101.85, near the middle of a stubborn trading range.

In other economic news, the Commerce Department released a report on Wednesday showing an unexpected drop in new orders for US manufactured durable goods in the month of May.

Durable goods orders fell by 1.0% in May following a 0.8% increase in April. The decrease came as a surprise to economists, who had expected orders to increase by another 0.4%.

Elsewhere, German consumer confidence is set to improve to the highest since 2006 in July, as economic expectations and willingness to spend strengthened after the European Central Bank lowered its key rate early this month.

The forward-looking consumer sentiment index rose to 8.9 in July from a revised 8.6 points in June, survey data from market research group GfK showed Wednesday.

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Source: Alliance News

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