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Forex News: Dollar Declines After Record Drop In U.S. GDP

Dollar Declines After Record Drop In U.S. GDP

07/30/2020 - 10:39:00 (RTTNews)

(RTTNews) - The U.S. dollar slipped against its major opponents in the European session on Thursday, after a data showed that the economy contracted at its fastest pace on record in the second quarter as business activity came to a halt during the pandemic lockdown.

Data from the Commerce Department showed a record contraction in U.S. economic activity in the second quarter.

The report said real gross domestic product plummeted at an annual rate of 32.9 percent in the second quarter following a 5.0 percent slump in the first quarter.

Data from the Labor Department showed that first-time claims for U.S. unemployment benefits increased for the second straight week in the week ended July 25th, although claims rose by much less than expected.

The report said initial jobless claims edged up to 1.434 million, an increase of 12,000 from the previous week's revised level of 1,422,000.

Lack of progress in talks between the White House and Congress over a new coronavirus aid package was also weighing on sentiment.

President Donald Trump said on Wednesday that his administration and Democrats in Congress were still "far apart" on a new coronavirus relief bill.

The greenback pulled back to 104.91 against the yen, from a 2-day high of 105.29 seen at 1:15 am ET. The greenback may face support around the 100.00 region, if it weakens again.

Data from the Ministry of Economy, Trade and Industry showed that Japan retail sales fell 1.2 percent on year in June.

That beat forecasts for a decline of 6.5 percent following the 12.3 percent drop in May.

The greenback dipped to 1.3044 against the pound, a level unseen since March 10. The greenback is seen challenging support around the 1.33 mark.

After climbing to 1.1731 at 5:00 am ET, the greenback weakened to 1.1796 against the euro. Next near term support for the greenback is seen around the 1.20 region.

Survey data from European Commission showed that Eurozone economic confidence improved to a four-month high in July as sentiment in industrial and service sectors strengthened amid the relaxation of coronavirus containment measures.

The economic sentiment index climbed to 82.3 in July from 75.8 in the previous month. The score was forecast to rise to 81.0.

The greenback fell back to 0.9117 against the franc, a pip short of more than a 5-year low of 0.9116 it logged in the Asian session. The currency may possibly face support around the 0.90 mark.

In contrast, the greenback held steady against the aussie and the kiwi, after rising to a 2-day high of 0.7129 and a 6-day high of 1.3433, respectively early in the trading session. At yesterday's close, the currency was worth 0.7187 against the aussie and 0.6668 versus the kiwi.

The greenback appreciated to a 6-day high of 1.3433 against the loonie, bouncing off from a low of 1.3333 set in the Asian session. Should the greenback gains further, 1.38 is possibly seen as its next resistance level.

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