Dollar Declines ahead of U.S GDP Data Release
Foreign Currencies

Dollar Declines ahead of U.S GDP Data Release

The United States (U.S) dollar declined against its major trading partners early Thursday ahead of an update to the first-quarter gross domestic product (Q1-GDP) and the release of weekly initial jobless claims.

Pending home sales, weekly natural gas stocks and the Kansas City Federal Reserve’s monthly manufacturing reading are also scheduled for release on Thursday.

Friday’s data schedule will include April’s personal income and spending data, with the Fed’s preferred inflation measure, and the final reading for the May Michigan Sentiment index.

Minutes of the May 3-4 Federal Open Market Committee meeting released Wednesday afternoon confirmed that further increases in the federal funds rate could take it into the restrictive territory to bring down inflation.

Comments from FOMC officials this week have turned slightly dovish in terms of how fast rates should be lifted later in the year, but an increase of 50 basis points remains the expected outcome at the June 14-15 meeting.

A quick summary of foreign exchange activity heading into Thursday shows that EUR-USD rose to 1.0716 from 1.0679 at the Wednesday US close and 1.0666 at the same point Wednesday morning.

Italian consumer confidence rebounded in May while business confidence declined, data released earlier Thursday showed. Italian industrial sales grew solidly in March.

The European Central Bank appears on track for its first rate increase in more than a decade at its July meeting based on comments from ECB officials this week.

GBP-USD rose to 1.2615 from 1.258 at the Wednesday US close and 1.2495 at the same point Wednesday morning. There are no UK data releases scheduled for Thursday. The Bank of England is expected to raise rates further at its June 16 meeting.

USD-CAD was virtually unchanged at 1.2818 from 1.2815 at the Wednesday US close and was down from the 1.2853 level at the same time Wednesday morning. READ: Nigerian Bourse Declines as Investors Dump Banking Stocks

Canadian retail sales are scheduled to be released on Thursday. The Bank of Canada meets next week, where a further rate increase is expected. USD-JPY slipped to 126.943 from 127.295 at the Wednesday US close and 127.1582 at the same point Wednesday morning.

There were no Japanese data releases on Thursday. While inflation has been accelerating in Japan, economic growth also remains a major issue that the Bank of Japan will continue to address by keeping interest rates low. #Dollar Declines ahead of U.S GDP Data Release