Forex - Dollar drops on robust Japan growth figures, Fed talk

Published 05/16/2012, 09:48 PM
Updated 05/16/2012, 09:49 PM
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Investing.com - The dollar fell against major world currencies in Asian trading on Thursday after news broke Japan's gross domestic product grew stronger than expected in the first quarter, giving investors reason to sell greenbacks for profits.

Talk that the Federal Reserve will keep the door open to monetary easing also sent the greenback falling.

In Asian trading on Thursday, EUR/USD was trading up 0.24% at 1.2746.

In Japan, the government reported the country's gross domestic product grew 1% in the first quarter from the fourth quarter, beating out market calls for 0.9% growth.

The country's GDP shrank 0.2% in the fourth quarter.

Meanwhile in the U.S., the Federal Reserve released the minutes of its latest monetary policy meeting earlier, revealing some policymakers favor rolling out monetary easing measures to jolt the economy should recovery wane.

"Several members indicated that additional monetary policy accommodation could be necessary if the economic recovery lost momentum or the downside risks to the forecast became great enough," the Federal Reserve minutes read.

Easing measures tend to weaken the greenback by flooding the economy with liquidity to push long-term interest rates low and encourage expansion and hiring.

In Europe, Greece appears headed for a new round of elections on June 17 after political parties failed to piece together a coalition government in wake of May 6 elections.

While electoral fears have pushed the euro down in recent trading sessions, the currency did see support on comments from German Chancellor Angela Merkel, who said she wants to see Greece stay in the currency bloc.

European Central Bank President Mario Draghi echoed similar sentiments.

In the U.K., the Bank of England reported inflation will likely to remain above its 2% target for at another year and cut its growth forecasts as well.

U.K. data showed that the number of people claiming unemployment benefits fell by 13,700, while the unemployment rate ticked down to 8.2%.

The greenback was down against the pound, with GBP/USD up 0.10% and trading at 1.5926.

The U.S. currency was down against the yen, with USD/JPY trading down 0.03% at 80.31, and down against the Swiss franc, with USD/CHF trading down 0.24% at 0.9423.

The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.09% at 1.0111, AUD/USD up 0.34% at 0.9946 and NZD/USD up 0.44% at 0.7676.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.27% at 81.42.

Later Thursday, the U.S. will reveal government data on weekly initial jobless claims, followed by a report on manufacturing activity in the Philadelphia area.







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