Forexpros – The dollar slid against major currencies on Friday after Federal Reserve language and government economic growth data confirmed market sentiments that the economy will remain stuck in the doldrums for a long time to come.
The dollar slumped against the euro in mid-afternoon U.S. trading on Friday, with EUR/USD rising 0.78% and trading at 1.3212.
At a Federal Open Market Committee meeting on Wednesday, the Federal Reserve concluded that interest rates, currently at a very low 0.25%, will likely stay that way through 2014, longer than a forecast made towards the end of last year that loose policies will stick around until 2013.
On Friday, the Commerce Department reported that the economy grew 2.8% in the fourth quarter, when compared with the same period a year earlier.
The figure came in a little lower than market expectations.
Furthermore, a good portion of growth came from companies replenishing their inventories and not by purchasing capital goods, which would have indicated plans for future investments and even more growth down the road, thus watering down the value of the greenback.
Furthermore, hopes rekindled that Greece is close to reaching a deal with private creditors to restructure its debt, a requirement for Athens if it wants to draw down from aid packages in the future.
“The next market focus is whether Greece will get this next aid package and whether it will be able to stay in the euro,” said Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London, according to Bloomberg.
“The market senses the Fed is cautious, so the market is scrutinizing all the data coming out of the U.S., so prices are really reacting.”
Meanwhile, the dollar was down against the pound, with Cable rising 0.19% to hit 1.5720.
The greenback was down 0.94% against the yen, with USD/JPY trading at 76.73, and down against the Swiss franc, with USD/CHF falling 0.78% to 0.9133.
The greenback was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.01% at 1.0017, AUD/USD up 0.14% at 1.0648 and NZD/USD up 0.19% at 0.8232.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.63% at 79.03.
Over the weekend, markets will look for signs of deal between Greece and its private creditors.
On Monday, markets will keep an eye on the U.S. Bureau of Economic Analysis, which will release figures on personal spending and income.
German inflation figures are tentatively due out, while German retail sales and Italian unemployment figures are set to publish as well.
In Japan, unemployment and industrial output figures will be released on Monday.
In the United Kingdom, Gfk Consumer Confidence numbers will hit the wire that day as well.
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