The dollar advanced versus the sterling and yen, but barely budged versus other majors Thursday in New York after a report on fourth quarter gross domestic product showed that the economy contracted a little faster than previously estimated.
The report released on Thursday showed that GDP fell by a revised 6.3 percent in the fourth quarter compared to the preliminary estimate of a 6.2 percent decrease. Economists had been expecting GDP to be revised to show a somewhat steeper 6.6 percent contraction.
After suffering steep losses last week amid a dramatic rebound in equities, the dollar has found its footing over the last few days, despite rhetoric from China expressing a desire to have a global currency replace the greenback as the world's reserve currency.
Its been a busy week in Washington, and Thursday's focus remained on Capitol Hill, where Treasury Secretary Tim Geithner outlined a broad plan to shore up the patchwork financial regulatory system, asking for the creation of a systemic risk regulator in order to oversee large financial institutions, like American International Group.
Attention will turn to London next week for an economic summit of the Group of 20 leaders. A number of key issues are on the table, but much attention will be paid to whether a coherent approach to the global economic crisis can be hammered out.
In currency moves Thursday, the dollar rallied versus the sterling, paring some of its recent losses after data showed that UK retail sales in February grew at the slowest pace since 1995. Consumers reduced their spending amid fears of deepening recession and rising unemployment.
The dollar jumped to a weekly high of 1.4430 against the sterling, moving away from a multi-week low of 1.4777. On a longer term basis, the dollar has moved well away from January's 23-year high of 1.3501.
Versus the euro, the dollar was little changed on the day, firming up a bit in afternoon dealing to trade at 1.3510. Overall, the dollar has seen choppy trading versus the euro over the past week, stabilizing from last week's big losses.
Signaling that policymakers across the Atlantic stand ready to tackle the lingering financial crisis more aggressively, European Central Bank Vice President Lucas Papademos said the ECB may extend of the maturity of liquidity provided to banks and purchase private debt securities in the secondary market.
German consumer confidence index is forecasting a value of 2.4 points for April, down from a revised 2.5 points reported in March, a survey conducted by the GfK market research group showed Thursday. Economists were expecting a reading of 2.5 for April.
The dollar made another push toward the elusive 100 mark versus the yen Thursday, topping out at a weekly high of 98.70. Earlier in March, the dollar hit 99.70, but has been unable to match that level since.
Dismal economic data continues to reveal the worst economic conditions in decades for the Japanese. Yesterday, Japan trade balance swung to surplus in February after showing deficits in past four months. However, there was a dark lining on the cloud, as exports plummeted by a record 49.4% on-year, falling for the fifth consecutive month. Imports fell 43% on-year, declining for the fourth straight month.
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