The U.S. Dollar fell broadly and hard after yesterday’s release of preliminary growth data indicated that the American economy nearly flat-lined in the first quarter of this year. A consensus of experts polled had predicted that annualized GDP would show a decline to 1.2% from 2.6% in the previous period; however, the results released by the U.S. Bureau of Economic Analysis show a hard drop to 0.1%, well below expectations. Despite the disappointing news, the Federal Reserve Bank announced its decision to continue its monthly tapering of QE reducing purchases now by $10 billion.
As reported at 11:35 a.m. (JST) in Tokyo, the U.S. Dollar Index, the gauge of the greenback’s relative strength, skidded 0.4% to trade at 79.511 .DXY. The EUR/USD bounced from the recently struck 3-week low to $1.3879 while the USD/JPY lost 0.4% to trade at 102.25 Yen. Against the Kiwi Dollar, the greenback toppled by 0.8% with the NZD/USD pair trading at $0.8633 at one point before easing back to $0.8613.
Euro Inflation Data Could Stay ECB’s Hand
Euro area data helped to boost the common currency, despite Eurozone inflation for April just missing analysts’ expectations of a rise to 0.7% from 0.5%. That positive news in the wake of Germany’s disappointing CPI data, could give the European Central Bank a slight reprieve in their future plans for possible additional easing to counteract the threat of enduring deflation. Nonetheless, analysts believe the handwriting is on the wall and eventually, perhaps even at next month’s policy meeting, the ECB will be forced to act.