Daily Afternoon Report 29/04/2015
The dollar fell to fresh two-month lows against a basket of other major currencies on Wednesday after data showing that U.S. economic growth slowed more sharply than expected in the first quarter, curbing expectations for higher interest rates.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last down 0.66% to 95.55, the weakest since March 18.
The Commerce Department reported that the U.S. gross domestic product grew just 0.2% in the three months to March, slowing from 2.2% in the final quarter of 2014. It was the slowest rate of growth in a year.
The consensus forecast among economists was for a more moderate slowdown to 1.0%.
Consumer spending, which accounts for approximately 70% of U.S. economic activity, slowed to 1.9%, down sharply from 4.4% in the fourth quarter.
The data came as investors were looking ahead to the Federal Reserve’s rate statement later in the day for further indications on the timing of a first-rate hike.
Recent disappointing economic reports have prompted investors to push back expectations for an initial rate hike to later in the year from midyear.
Elsewhere, Euro was boosted after data earlier Wednesday showed that German consumer prices rose at an annual rate of 0.4% in April, broadly in line with market expectations, easing concerns over the threat of deflation in the euro area.
Separate reports showed that eurozone bank lending to the private sector ticked higher in March for the first time in three years and consumer inflation expectations rose for the first time this year.