The greenback strengthens broadly on upbeat U.S. GDP
U.S. dollar strengthened broadly on Tuesday as data showed that the U.S. economy grew faster than expected in the last quarter, despite the disappointing durable goods reports.
Versus the Japanese yen, the greenback traded in a sideways manner throughout Asia after rising to 120.19 in Australia and briefly edged lower to 120.05 in European morning, however, dollar found renewed buying there and gained ahead of New York open. Intra-day ascent accelerated after the release of upbeat U.S. GDP data, which boosted expectation of a rate hike from FOMC and price rallied to 120.80 in New York morning before easing off on profit-taking.
The Commerce Department from U.S. revised up its GDP growth estimate to a 5.0 % annual pace on Tuesday, citing stronger consumer and business spending than it had previously assumed. The figure was the fastest growth pace since the third quarter of 2003. Meanwhile, a separate report, official data showed U.S. durable goods orders fell unexpectedly last month. The Census Bureau said that durable goods orders in U.S. fell to -0.7%, from 0.3% in the preceding month. Market had expected durable goods orders to rise 3.0% last month.
Later, the University of Michigan said that consumer sentiment fell to a seasonally adjusted 93.6, from 93.8 in the preceding month. It is the best showing on a final basis since January 2007 and the latest in a string of increases since August.
Although the single currency edged higher from Monday's New York low at 1.2217 in Asia and briefly climbed to 1.2246 in European morning in part due to cross-buying in euro, renewed selling interest checked intra-day gain there and price tumbled to a fresh 28-month low at 1.2165 in New York morning as release of upbeat U.S. GDP data triggered broad-base demand in greenback. Euro later recovered to 1.2191 before moving sideways for rest of the New York session.
The British pound weakened to a fresh 14-month trough versus the usd on Tuesday. Despite edging higher from Australia's low at 1.5572 to 1.5608 in European morning, release of a batch of mixed economic reports from the U.K. knocked price down to 1.5522 ahead of New York morning. Later, broad-based strength in greenback on upbeat U.S. economic growth report pressured cable further to 1.5486 in New York morning before stabilising.
On Tuesday, data showed the economy in U.K. grew by 0.7% in the third quarter period from the previous quarter, in line with a previous estimate and slowing only a bit from a revised 0.8% between April and June. In annual terms, growth was revised down to 2.6% from a previous reading of 3.0%, hurt by lower business and government investment and higher imports than thought in an earlier estimate. Meanwhile, a report from National Statistics showed that U.K. current account balance fell to a seasonally adjusted -27.0 billion pounds, from -24.3 billion pounds in the preceding month whose figure was revised down from -23.1 billion pounds.
Wednesday will see the release of Australia's CB Leading Indicator, Switzerland's KOF Leading Indicator; U.S. Initial Jobless Claims.
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