The U.S. dollar hit multi-month lows against the yen and Swiss franc as U.S. economic growth data showed growth in the world's largest economy is slowing and reinforced the view interest rates will remain low well into the next year.
Traders sold the dollar after today's second quarter GDP data showed an expansion at a 2.4% annual rate, after a revised 3.7% pace in the January-March quarter. Following a week of disappointing economic data out of the U.S., the dollar remains under pressure.
The euro continues to benefit from weaker-than-expected economic data out of the U.S. With two-weeks of strong euro zone economic data behind the single currency, traders have pushed the euro up nearly 7% against the USD this month. The next technical level for the euro will be $1.3125.
The British pound remained near a 5-month peak against the dollar, despite a survey released today showing UK consumer confidence at an 11-month low in July. This report followed weak UK housing data on Thursday but it contrasted with recent upside surprises in UK data, with second quarter GDP and July CBI retail sales the standout releases which have helped buoy sterling in recent days.
The Canadian dollar edged higher, breaching 3-month peaks against the greenback, boosted by broader U.S. dollar weakness. With Canada's May GDP data edging higher in May, this was in sharp contrast to today's U.S. economic woes.
The Japanese yen breached 8-month highs against the USD as investors flee the dollar in the aftermath of an unfavorable U.S. GDP report. The yen showed little reaction to comments by Japanese Finance Minister Yoshihiko Noda who said he was closely watching the market. Deputy Finance Minister Motohisa Ikeda said he was worried about the impact of a rising yen on Japan's exports.
The Australian and New Zealand dollars fell victim to a bout of profit taking after yesterday's surge. The New Zealand dollar remained sold by bets that interest rates there may rise more slowly in coming months.
Overall, the Aussie has fared well in July. It is on track to climb 7 percent for the month, its best showing in 13 months. The NZD is up about 5% so far this month, while it is down around 5% for the year.
Indications of Overnight rates:EUR/USD
10-Year Treasury Note Yield: 2.9320%Dow Jones Industrial Average: 10,472.08 +4.92
This market summary is prepared by Union Bank's Global FX Department for the general information of its customers. It is based on the most accurate information currently available, but should not be considered investment advice or a guarantee of future exchange rates or trends.