The U.S. dollar extended its decline against its major trading partners in the European session on Thursday, as the economy expanded less than forecast in the second quarter and on comments from Federal Reserve Chairman Jerome Powell that rate hikes are unlikely to happen anytime soon. Data from Commerce Department showed that GDP rose by 6.5 percent in the second quarter following a 6.3 percent jump in the first quarter. Economists had expected GDP to spike by 8.5 percent. The GDP growth in the second quarter reflected increases in consumer spending, non-residential fixed investment, exports, and state and local government spending. However, decreases in private inventory investment, residential fixed investment, and federal government spending limited the upside along with an increase in imports, which are a subtraction in the calculation of GDP. The Fed Chair affirmed 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. The Fed chief remarked that “there is still a long way to go” to attain a full recovery in the labor market. 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 five-year spending package would be paid for using COVID-19 relief funds, illegally paid unemployment benefits during the crisis and unutilized federal unemployment funds. The currency fell in the Asian session, as Powell maintained a dovish stance, saying that rate increases were far away. The greenback dropped to its lowest level since June 16 against the franc, at 0.9066. At yesterday’s trading close, the pair was quoted at 0.9100. Further drop in the currency may challenge support around the 0.88 level. The greenback lost 0.4 percent to more than a 3-week low of 1.1889 against the euro. The pair was worth 1.1843 when it closed deals on Wednesday. Should the greenback dips further, 1.21 is possibly seen as its next support level. Survey results from the European Commission showed that Eurozone economic confidence hit a record high in July driven by rising sentiment in the industrial and service sectors. 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 greenback declined 0.6 percent to 1.3982 against the pound for the first time since June 24. The pound-greenback pair had ended yesterday’s trading session at 1.3897. The greenback is seen facing support around the 1.41 level. 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 greenback touched a 2-day low of 0.7005 against the kiwi, down from Wednesday’s trading close of 0.6955. Immediate support for the greenback is likely located around the 0.72 level. Survey results from ANZ showed that New Zealand business confidence eased in July. The business confidence index fell to -3.8 in July from -0.6 in June. The own activity outlook index dropped to 26.3 from 31.6 in the previous month. The greenback was down by 0.4 percent against the yen, at a 9-day low of 109.50. The pair had closed Wednesday’s deals at 109.91. The greenback is likely to test support around the 107.00 level. The greenback held steady against the loonie, after having fallen to a fresh 2-week low of 1.2451 at 4:30 am ET. The greenback was trading at 1.2521 against the loonie at yesterday’s close. The U.S. currency, however, bounced off from nearly a 2-week low of 0.7413 against the aussie, with the pair trading at 0.7399. The greenback was worth 0.7374 per aussie at Wednesday’s New York session close. Data from the Australian Bureau of Statistics showed that Australia export prices rose 13.2 percent on quarter in the second quarter of 2021 – accelerating from 11.2 percent in the previous three months. On a yearly basis, export prices surged 26.0 percent. .
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