Strong US data weakens dollar

 

coins,dollar,money,currencyThe Australian dollar is lower after US economic growth bounced back in the June quarter after a decline earlier in the year.

At 0700 AEST on Thursday, the local unit was trading at 93.30 US cents, down from 93.74 cents on Wednesday.

US gross domestic product (GDP) grew at a rapid pace of four per cent in the 12 months to June, much better than the fall of 2.1 per cent in the 12 months to to March.

Westpac senior market strategist Imre Speizer said there was US dollar rally, which put downward pressure on other currencies.

“The US dollar was boosted by strong US data,” he said.

“GDP easily beat estimates, causing US equities to fall in response,” he said.

“The Australian dollar suffered from the US dollar strength, falling from 93.80 US cents to 93.04 US cents.”

The Australian dollar gained a bit of ground later in the overnight session after the US central bank’s Federal Open Market Committee said that its interest rate will stay low for a considerable time.

In a statement at the end of a two-day policy meeting, the FOMC also expressed disappointment at the rate of employment growth.

Mr Speizer said the Fed’s failure to express a desire to increase the Federal Funds Rate disappointed the market.

Local markets on Thursday will focus on the release of official building approvals figures for June.

AAP

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