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Dollar Extends Losses Against Other Major Currencies

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Dollar Extends Losses Against Other Major Currencies

The U.S. dollar lost ground against its major peers on Thursday, weighed down by a report saying the U.S. economy expanded less than forecast in the second quarter, and comments from Fed Chair Jerome Powell that the bank is unlikely to hike rates anytime soon.

Powell said on Wednesday that the economy was “still a ways off” from reaching a standard of “substantial further progress” to scale back the asset purchase program.

Powell added that although the economy has made progress towards its goals for inflation and labor market since the June meeting, the threshold to begin tapering bond purchases has not been achieved. He remarked that “there is still a long way to go” to attain a full recovery in the labor market.

Meanwhile, the U.S. Senate voted to push forward a bipartisan infrastructure plan amounting to $550 billion, which includes funding for roads, bridges, broadband and other physical infrastructure.

The Commerce Department’s report today said real GDP surged up by 6.5% in the second quarter following a 6.3% jump in the first quarter. Economists had expected GDP to spike by 8.5%.

Data released by the Labor Department showed initial jobless claims dipped to 400,000 in the week ended July 24th, a decrease of 24,000 from the previous week’s revised level of 424,000. Economists had expected jobless claims to drop to 380,000 from the 419,000 originally reported for the previous week.

The dollar index dropped to 92.86 in the New York session, and was last seen at 91.91, down 0.45% from the previous close.

Against the Euro, the dollar weakened to $1.1886 from $1.1844. Eurozone economic confidence hit a record high in July driven by rising sentiment in the industrial and service sectors, survey results from the European Commission showed.

The economic confidence index rose to 119.0 from 117.9 in June. This was the highest since records began in 1985 and also well above economists’ forecast of 118.5.

The Pound Sterling firmed against the dollar, fetching $1.3962 a unit, more than 0.4% up from Wednesday’s level of $1.3903. Data from the Bank of England showed that the UK mortgage borrowing hit a record level in June, ahead of the lower stamp duty rates began to taper off from July.

Net mortgage borrowing reached a record GBP 17.9 billion in June. Evidence suggests there has been a shortening of time between a mortgage being approved and the lending itself, the BoE said.

The dollar was weaker against the yen at 109.46 yen, compared to 109.91 Wednesday evening.

The Aussie strengthened against the dollar, fetching $0.7392, nearly 0.25% from the previous close of $0.7374. Data from the Australian Bureau of Statistics showed that Australia export prices rose 13.2% on quarter in the second quarter of 2021, accelerating from 11.2% in the previous three months. On a yearly basis, export prices surged 26%.

Against Swiss franc, the dollar weakened to CHF 0.9062 from CHF 0.9101. The Loonie firmed to 1.2448 from 1.2528 as crude oil prices rose sharply.

The material has been provided by InstaForex Company – www.instaforex.com