U.S. Dollar moving lower helps oil price
Posted: Sat Jul 29, 2017 8:21 am
The U.S. dollar fell on Friday, suffering its third straight weekly decline after a reading on economic growth came in below expectations, though analysts said the beleaguered currency was potentially nearing a bottom.
The ICE U.S. Dollar Index DXY, -0.61% which tracks the greenback against a half-dozen other major rivals, fell 0.6% to 93.34, hitting its lowest level since June 2016, according to FactSet data. The WSJ Dollar index BUXX, -0.43% which compares the buck against a wider basket of other currencies, was down 0.5% to 86.07.
U.S. gross domestic product expanded at an annual rate of 2.6% in the second quarter, below expectations for a 2.8% increase. In the first quarter, growth came in at 1.2%.
“The number was a little on the soft side, but the dollar plunged on it a bit more than I would have expected. It was a slight disappointment, but not much to write home about,” said Colin Cieszynski, chief markets strategist at CMC Markets.
Separately, the final reading of the University of Michigan’s consumer-sentiment survey for July was lifted to 93.4 from a preliminary 93.1. That is a decline, however, from June’s level of 95.1.
The recent trend in the dollar has been lower. It has dropped for three straight weeks, including its 0.6% decline this week. Thus far in 2017, it has dropped 8.9%.
“I think we’re starting to near a bottom. We’ve had a couple of attempts to pound the index under 93, but it hasn’t gone under,” Cieszynski said. “It may be too early to say whether a base is forming or whether this is just a pause in a larger downtrend, but we are oversold at these levels.”
Recent weakness in the dollar came as the Federal Reserve was seen striking a cautious note on inflation. Inflation was “running below 2%”, the Federal Open Market Committee said, tweaking language from June’s statement in which it said inflation was “running somewhat below 2%.”
Against its U.S. counterpart, the euro EURUSD, +0.6338% bought $1.1757 Friday compared with $1.1676 late Thursday. The euro hit $1.1735 earlier this week, the highest since Jan. 14, 2015. The euro has strengthened 11.7% so far this year.
In data, the French economy expanded 0.5% in the second quarter, with statistics agency Insee’s first estimate of growth showing exports climbed 3.1% while imports slowed. Also from France, inflation rose 0.7% in July, the same rate notched in June.
German consumer prices rose by a faster-than-expected rate of 0.4% in July on the month, and inflation rose 1.5% on the year, according to Destatis.
The pound GBPUSD, +0.5357% was at $1.3144, up from $1.3066 late Thursday, a move of 0.6%. The pair hit $1.3122 on Wednesday, its strongest since September. Since the start of the year, the pound is up 6.4% against the buck.
The dollar fell against the yen USDJPY, -0.51% buying ¥110.63 versus ¥111.26, a decline of 0.6% that pushed the buck into negative territory against the Japanese currency for the week. Thus far this year, the dollar has lost 5.4%.
In other trades, the Swiss franc USDCHF, +0.4041% fell for a fourth-straight day Friday and is on track to post its largest monthly drop in six years against the euro as some hedge funds sold the currency after it punctured major technical levels this week. On Friday it fell 0.4% against the dollar.
Separately, Canada’s GDP expanded at a 0.6% pace in May, well above the 0.2% rise that had been expected. Against the Canadian dollar USDCAD, -0.9717% sank 1%, trading at C$1.2434 from C$1.2555.
The ICE U.S. Dollar Index DXY, -0.61% which tracks the greenback against a half-dozen other major rivals, fell 0.6% to 93.34, hitting its lowest level since June 2016, according to FactSet data. The WSJ Dollar index BUXX, -0.43% which compares the buck against a wider basket of other currencies, was down 0.5% to 86.07.
U.S. gross domestic product expanded at an annual rate of 2.6% in the second quarter, below expectations for a 2.8% increase. In the first quarter, growth came in at 1.2%.
“The number was a little on the soft side, but the dollar plunged on it a bit more than I would have expected. It was a slight disappointment, but not much to write home about,” said Colin Cieszynski, chief markets strategist at CMC Markets.
Separately, the final reading of the University of Michigan’s consumer-sentiment survey for July was lifted to 93.4 from a preliminary 93.1. That is a decline, however, from June’s level of 95.1.
The recent trend in the dollar has been lower. It has dropped for three straight weeks, including its 0.6% decline this week. Thus far in 2017, it has dropped 8.9%.
“I think we’re starting to near a bottom. We’ve had a couple of attempts to pound the index under 93, but it hasn’t gone under,” Cieszynski said. “It may be too early to say whether a base is forming or whether this is just a pause in a larger downtrend, but we are oversold at these levels.”
Recent weakness in the dollar came as the Federal Reserve was seen striking a cautious note on inflation. Inflation was “running below 2%”, the Federal Open Market Committee said, tweaking language from June’s statement in which it said inflation was “running somewhat below 2%.”
Against its U.S. counterpart, the euro EURUSD, +0.6338% bought $1.1757 Friday compared with $1.1676 late Thursday. The euro hit $1.1735 earlier this week, the highest since Jan. 14, 2015. The euro has strengthened 11.7% so far this year.
In data, the French economy expanded 0.5% in the second quarter, with statistics agency Insee’s first estimate of growth showing exports climbed 3.1% while imports slowed. Also from France, inflation rose 0.7% in July, the same rate notched in June.
German consumer prices rose by a faster-than-expected rate of 0.4% in July on the month, and inflation rose 1.5% on the year, according to Destatis.
The pound GBPUSD, +0.5357% was at $1.3144, up from $1.3066 late Thursday, a move of 0.6%. The pair hit $1.3122 on Wednesday, its strongest since September. Since the start of the year, the pound is up 6.4% against the buck.
The dollar fell against the yen USDJPY, -0.51% buying ¥110.63 versus ¥111.26, a decline of 0.6% that pushed the buck into negative territory against the Japanese currency for the week. Thus far this year, the dollar has lost 5.4%.
In other trades, the Swiss franc USDCHF, +0.4041% fell for a fourth-straight day Friday and is on track to post its largest monthly drop in six years against the euro as some hedge funds sold the currency after it punctured major technical levels this week. On Friday it fell 0.4% against the dollar.
Separately, Canada’s GDP expanded at a 0.6% pace in May, well above the 0.2% rise that had been expected. Against the Canadian dollar USDCAD, -0.9717% sank 1%, trading at C$1.2434 from C$1.2555.