Forexpros – The dollar fell against most major global currencies on Friday after second-quarter gross domestic product (GDP) figures in the U.S. fueled more talk the Federal Reserve will feel obliged to stimulate the U.S. economy even if not now but later down the road.
The U.S. GDP expanded 1.5% in the second quarter, according to advance estimates from the Commerce Department, in line with expectations.
In U.S. trading on Friday, EUR/USD was up 0.12% at 1.2297, erasing earlier gains.
The U.S. economy grew in line with forecasts, even outpacing some analysts’ calls.
However, GDP growth estimates called for sluggish expansion in the first place, as the economy continues limping along its road to recovery.
The numbers left investors to conclude that while the April-June GDP figures alone might not nudge the Federal Reserve to stimulate the economy right away via quantitative easing, such tools remain on the table for further use later.
Under quantitative easing, the Fed buys bonds held by banks, pumping the economy full of liquidity and weakening the greenback in the process.
Consumer sentiment figures behaved in a similar manner on Friday, beating estimates but confirming broader sentiment that recovery will require tools from the U.S. central bank that weaken the greenback in exchange for more price stability and conditions that foster job creation.
The Thomson Reuters/University of Michigan’s final reading on the overall index on consumer sentiment fell to 72.3 in July from 73.2 in June.
Analysts, however, were expecting the figure to fall lower to 72.0, the preliminary figure for July.
Meanwhile in Europe, ECB President Mario Draghi said monetary policy officials would do what they can to save the eurozone, which bolstered the euro and other higher-yielding currencies against the dollar.
French President Francois Hollande and German Chancellor Angela Merkel made similar remarks on Friday.
The greenback, meanwhile, was down against the pound, with GBP/USD trading up 0.22% at 1.5721
The dollar was up against the yen, with USD/JPY trading up 0.54% at 78.61, and down against the Swiss franc, with USD/CHF trading down 0.21% at 0.9757.
The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.57% at 1.0042, AUD/USD up 0.70% at 1.0469 and NZD/USD up 0.95% at 0.8096.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.15% at 82.77.
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