Dollar Retreats As U.S. GDP Growth Matches Expectations
The U.S. dollar erased its early gains against its major
opponents in the European session on Thursday, after a data showed
that the nation's economic growth matched economist estimates in
the fourth quarter of 2020.
Data from the Commerce Department showed that real gross
domestic product jumped by 4.0 percent in the fourth quarter after
skyrocketing by 33.4 percent in the third quarter. The continued
GDP growth came in line with expectations.
Despite the rebound in the second half of the year, GDP for 2020
contracted by 3.5 percent following the 2.2 percent growth seen in
Data from the Labor Department showed a continued pullback in
first-time claims for U.S. unemployment benefits in the week ended
The Labor Department said initial jobless claims fell to
847,000, a decrease of 67,000 from the previous week's revised
level of 914,000.
Economists had expected jobless claims to drop to 875,000 from
the 900,000 originally reported for the previous week.
Caution prevailed as the Federal Reserve offered a downbeat
assessment of the economy, saying that the virus crisis continues
to weigh on economic activity, employment, and inflation, and poses
considerable risks to the economic outlook.
The economy was still a long way from a complete recovery,
Powell said, adding that it is too early to talk about tapering the
Fed's asset purchase program.
The dollar appreciated during the Asian session, as concerns
about over valuations in equity markets and the Fed's indication of
a slowdown in the pace of the recovery boosted safe-haven
The greenback reached as low as 1.2142 against the euro, down
from Wednesday's closing value of 1.2108. The next immediate
support for the greenback is seen around the 1.24 level.
The greenback edged down to 1.3695 against the pound, after a
2-day rise to 1.3630 at 4:30 am ET. The pound-greenback pair had
ended yesterday's trading session at 1.3679. The greenback is
likely to challenge support around the 1.41 mark.
Data from the Society of Motor Manufacturers and Traders showed
that UK car production declined to the lowest in 36 years in 2020
amid the coronavirus pandemic.
Car production decreased 29.3 percent to 920,928 units in 2020.
This was the lowest output since 1984.
The greenback reversed from an early 1-1/2-month high of 104.46
against the yen, with the pair worth 104.25. The pair had closed
Wednesday's deals at 104.09. The greenback is seen finding support
around the 100.00 region.
Data from the Ministry of Economy, Trade and Industry showed
that Japan retail sales fell 0.3 percent on year in December -
coming in at 14.434 trillion yen.
That beat expectations for a decline of 0.4 percent following
the downwardly revised 0.6 percent increase in November.
Having advanced to an 8-day high of 0.8919 at 4:30 am ET, the
greenback turned lower against the franc and was trading at 0.8885.
Further decline in the currency is likely to see support around the
Data from the Federal Customs Administration showed that
Switzerland's exports declined in December.
Exports decreased 6.4 percent month-on-month in December, while
imports declined 6.7 percent.
The greenback eased off to 0.7150 versus the kiwi, 0.7647 versus
the aussie and 1.2824 versus the loonie, following its early 9-day
high of 0.7105, more than 4-week high of 0.7592 and a fresh 5-week
high of 1.2881, respectively. The dollar had closed Wednesday's
trading at 0.7156 versus the kiwi, 0.7662 versus the aussie and
1.2796 versus the loonie. If the greenback slides further, 0.74,
0.78 and 1.21 are likely seen as its next support levels versus the
kiwi, the aussie and the loonie, respectively.