FOREX-Dollar slides after weak U.S. GDP, durable goods data

Wed Jun 25, 2014 10:27am EDT

Related Topics

* U.S. GDP, durable goods data weaker than expected

* Geopolitical concerns underpin the yen

* Pound edges higher against dollar on weak U.S. data (Updates prices, adds comments, changes byline, dateline, previous LONDON)

By Sam Forgione

NEW YORK, June 25 (Reuters) - The U.S. dollar slid to a one-month low against a basket of major currencies on Wednesday after weak U.S. gross domestic product and durable goods orders data signalled the likelihood of a continued dovish stance from the Federal Reserve.

The Commerce Department said U.S. gross domestic product fell at a 2.9 percent annual rate in the first quarter, instead of the 1.0 percent pace it had reported last month, to record its worst performance in five years.

In a second report, the department said orders for long-lasting U.S. manufactured goods fell 1.0 percent last month, marking the first decline in three months. Economists polled by Reuters had forecast orders being flat.

"I would call it a shock given what was expected," said Nawaz Ali, currency analyst at Western Union Business Solutions in London, on the U.S. GDP revision. "Today's data is a warning that (the Fed) may have to still print money for longer," he added.

Many expect the Fed to end its massive bond-buying program in October. The Fed announced plans to reduce its monthly purchases to $35 billion in July at the end of its last policy meeting. Traders are also watching data closely for signs of when the U.S. central bank will raise interest rates.

The U.S. dollar index, which measures the dollar against a basket of six major currencies, was last down 0.22 percent at 80.153. The index earlier hit 80.091, its lowest in over a month.

The euro was last up 0.25 percent against the dollar to trade at $1.3639. The currency hit a more than two-week high against the dollar of $1.36515 earlier in the session.

The dollar was last down 0.25 percent against the yen at 101.72 yen after having fallen to a near two-week low of 101.62. The dollar was also last down 0.25 percent against the Swiss franc to trade at 0.8915 franc.

Ali of Western Union said traders sought the yen as a safe haven on escalating tensions in Iraq stemming from a Sunni insurgent onslaught. The British pound also edged 0.05 percent higher against the dollar at $1.6993 after Tuesday's losses.

"The pound's rebound off the weak U.S. data offset about half its drop off the Carney comments," said Steven Englander, global head of G10 FX strategy at CitiFX in New York. The pound fell on Tuesday after surprisingly less hawkish comments from Bank of England Governor Mark Carney.

Englander also said a drop in U.S. government bond yields hurt the dollar. The benchmark 10-year U.S. Treasury note was last up 13/32 in prices to yield 2.54 percent. (Reporting by Sam Forgione; Additional reporting by Anirban Nag in London; Editing by James Dalgleish)

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