Dollar Falls as GDP Trails Forecast, Jobless Claims Increase
July 31 (Bloomberg) -- The dollar fell for the first time in three days against the euro as reports showed the U.S. economy grew less than forecast in the second quarter and initial jobless claims rose last week to a five-year high.
FX Awaits US Jobs
by Korman Tam
7/31/2008 3:03:00 PM
The dollar is firmer against the majors by the New York afternoon following sharp swings in the morning to hover near similar levels from the previous session. The greenback sold off heavily across the board following a sharply higher than expected weekly jobless claims reading, which surged to 448k from 406k in the previous week due to "special factors", prompting the dollar to lose footing to the just beneath the 1.57-handle. However, the losses were short-lived as traders took to the sidelines ahead of Friday's key July labor report. The dollar also benefited from pullbacks in both spot gold and crude oil, which reversed their earlier session's gains.
The advanced reading for Q2 GDP was slightly less than forecast at 1.9%, marginally missing estimates of 2%, but improving from the previous reading of 1.0%. The employment cost index held steady at 0.7%, while the GDP deflator fell sharply to 1.1% from 2.7% in the previous quarter. Meanwhile, the July Chicago PMI unexpectedly improved above the 50-level to 50.8, versus 49.6 in June.
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