Investing.com - The dollar eased back from session lows against a basket of major currencies on Thursday, after updated data showed that the U.S. economy slowed sharply in the first three months of the year and a separate report showed a larger than expected decline in initial jobless claims.
The Bureau of Economic Analysis reported that U.S. gross domestic product contracted 1.0% in the first quarter, after the preliminary estimate showed growth of 0.1%. Market expectations had been for a 0.5% contraction.
It was the first decline in U.S. GDP since the first quarter of 2011.
However the report also indicated that economic activity has since rebounded. Consumer spending, which makes up more than two-thirds of economic activity, increased by 3.1%, up from the preliminary estimate of 3.0%.
At the same time, the Department of Labor said the number of people who filed for unemployment assistance in the U.S. last week fell by 27,000 to 300,000, compared to expectations for a decline of 9,000.
EUR/USD was up 0.10% to 1.3605 following the release of the data, not far from the three month trough of 1.3587 struck on Wednesday.
The euro remained under pressure amid mounting expectations that the European Central Bank will ease monetary policy at its upcoming meeting next week, in order to safeguard the fragile recovery in the euro area.
The dollar trimmed losses against the yen, with USD/JPY down 0.11% to 101.72, off session lows of 10.47, while USD/CHF was down 0.11% to 0.8974.
The pound was steady at six-week lows, with GBP/USD at 1.6709. Sterling posted its largest one-day decline against the dollar in four months on Wednesday as concerns that the U.K. housing market could be losing some momentum tempered expectations for a rate hike by the Bank of England later this year.
Sterling remained weaker even after BoE monetary policy committee member Martin Weale said Wednesday that a rise in the cost of borrowing should happen "sooner rather than later".
The Canadian dollar rose to session highs against the greenback, with USD/CAD down 0.16% to 1.0856 after data showed that Canada’s current account narrowed more than expected in the first quarter.
AUD/USD was up 0.53% to 0.9280 after rising as high as 0.9313 earlier in the trading day. The Aussie was boosted after data showed that private capital expenditure in Australia dropped in the first quarter as investment in mining fell, but indicated that the investment outlook for the rest of the year was brighter.
Meanwhile, NZD/USD was down 0.21% to 0.8475.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.09% to 80.53, holding above lows of 80.63.