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US Dollar Weakens on Revised GDP

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US Dollar Weakens on Revised GDP

The US dollar declined broadly against a basket of currencies, after revised GDP data reminded the forex market the US economy was still recovering.

The US economy expanded at an annualized rate of 2.4 percent in the fourth quarter, compared to an initial estimate of 3.2 percent, the Commerce Department reported today. The second estimate, based on more concrete data, showed the US economy lost some of its momentum in the fourth quarter.

The increase in real GDP last quarter reflected positive contributions from exports, personal consumption expenditures, private inventory investment and non-residential fixed investment, official data showed. Positive contributions were partially offset by reduced federal and local government spending, lower residential fixed investment and higher imports.

The US dollar index, a broad measure of the greenback’s performance, fell to a daily low of 79.75. As of 17:30 GMT, the index was down more than half a percent at 79.82.

The North American pair fell sharply after Canada posted stronger than forecast GDP estimates. The Canadian economy accelerated 2.9 percent annually in the fourth quarter, even as severe weather curtailed growth in December. As of 17:30 GMT, the USDCAD was trading at 1.1066, a loss of 61 pips.

The EURUSD soared more than 100 pips to 1.3815, as forex traders increased their stake in the euro after Germany said retail sales surged in January. Additionally, stabilizing consumer inflation in the Eurozone reduced the likelihood the European Central Bank will loosen policy further at next week’s policy meetings.

Mixed US data helped the British pound, which was relatively idle Friday. The GBPUSD pair rose 69 pips to 1.6758.

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