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Forex News: Stronger Than Expected U.S. GDP Data Lifts Dollar

Stronger Than Expected U.S. GDP Data Lifts Dollar

07/26/2019 - 09:54:00 (RTTNews)

(RTTNews) - The U.S. dollar gained traction against its major counterparts in the European session on Friday, as the U.S. economy expanded more than expected in the second quarter, supporting the likelihood of a less dovish stance from the Federal Reserve next week.

Data from the Commerce Department showed that real gross domestic product climbed by 2.1 percent in the second quarter following the 3.1 percent jump in the first quarter. Economists had expected the pace of GDP growth to slow to 1.9 percent.

The stronger than expected GDP growth reflected positive contributions from consumer spending, federal government spending, and state and local government.

The data came on the back of encouraging jobless claims data and durable goods orders released Thursday that helped recede hopes for a larger cut at next week's meeting.

U.S. Treasury yields have been rallying since overnight comments from ECB President Mario Draghi, who suggested little risk of a recession in the currency bloc.

This prompted investors to assess that the Fed is unlikely to be too dovish when it meets next week.

Market participants are widely pricing in a reduction of 25 basis points at the Fed meeting ending July 31.

The currency held steady against its major counterparts in the Asian session, excepting the pound.

The greenback appreciated to a 9-day high of 1.2411 against the pound from yesterday's closing value of 1.2447. The currency is likely to find resistance around the 1.22 level.

For the first time since July 10, the greenback strengthened to 108.83 against the yen. The pair had ended yesterday's trading at 108.63. Should the greenback rises further, 111.00 is likely seen as its next resistance level.

Data from the Ministry of Internal Affairs and Communications showed that consumer prices in the Tokyo region of Japan rose 0.9 percent on year in July.

That was shy of expectations for a gain of 0.9 percent and down from 1.1 percent in June.

The greenback gained to 1.1126 against the euro, following a decline to 1.1151 at 11:30 pm ET. The greenback is seen finding resistance around the 1.09 level.

Data from Destatis showed that Germany's import prices declined at a faster-than-expected rate in June.

Import prices declined 2.0 percent on a yearly basis in June, following a 0.2 percent fall in May. Economists had expected a 1.5 percent fall.

The U.S. currency strengthened to more than a 2-week high of 0.9934 against the franc, up from Thursday's closing value of 0.9908. Next immediate resistance for the greenback is possibly seen around the 1.005 region.

The greenback rose to more than a 4-week high of 1.3194 versus the loonie, more than 2-week highs of 0.6918 against the aussie and 0.6634 against the kiwi, from its prior lows of 1.3155, 0.6955 and 0.6665, respectively. The next possible resistance for the greenback is seen around 1.33 versus the loonie, 0.68 against the aussie and 0.645 against the kiwi.

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