News Column

US Dollar Falls On Weak Durable Goods Orders, GDP Data

June 25, 2014

CANBERA (Alliance News) - The US dollar slipped against its key counterparts in early New York deals on Wednesday, as data showed that durable goods orders unexpectedly fell in May and economy contracted sharply in the first quarter, raising concerns over outlook of world's largest economy.

Economic activity in the US decreased by much more than previously estimated in the first quarter of 2014, according to a report released by the Commerce Department.

The report showed that US gross domestic product tumbled by 2.9% in the first quarter compared to the previously estimated 1.0% drop. Economists had expected the revised data to show a 1.8% decrease. The much steeper than previously estimated drop primarily reflected downward revisions to consumer spending and exports and an upward revision to imports.

Separately, the Commerce Department said that US durable goods orders fell by 1.0% in May following a 0.8% increase in April. The pullback came as a surprise to economists, who had expected orders to increases by another 0.4%. Excluding the steep drop in orders for transportation equipment, orders fell by a more modest 0.1% in May compared to a 0.4% increase in April.

The greenback depreciated by 0.3% to 1.3650 against the euro, its weakest since June 9. Continuation of downtrend may take the greenback to a support around the 1.37 zone. The pair was worth 1.3605 at yesterday's close.

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 today.

The greenback lost 0.3% to hit near a 3-week low of 0.8909 against the Swiss franc, compared to Tuesday's closing value of 0.8935. The next possible downside target for the greenback-franc pair lies around the 0.88 mark.

Having advanced to a 1-week high of 1.6951 against the Sterling earlier, the greenback moved down to 1.7003 shortly after the data. The greenback is likely to find downside target around the 1.71 area. The pair was trading at 1.6983 when it closed deals yesterday.

The greenback fell to 101.62 against the yen, its lowest since June 12. This is a 0.3% decline from Tuesday's closing value of 101.96. Further weakness may lead the greenback to a support at the 101.00 mark.

The greenback reversed from early 1-week high of 0.9353 against the aussie, declining to 0.9397. If the greenback extends its decline, it may find support at the 0.945 mark. At Tuesday's close, the pair was worth 0.9366.

The greenback fell to a 2-day low of 0.8729 against the NZ dollar, following a weekly high of 0.8661 hit in early deals. The greenback may find downside target around the 0.88 region.

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Source: Alliance News

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