FOREX-Dollar edges lower ahead of key U.S. economic data

Mon Jul 28, 2014 10:45am EDT

Related Topics

* Traders eye this week's U.S. GDP, jobs data

* Two-day Federal Reserve meeting also on calendar

* U.S. pending home sales unexpectedly fall (Updates prices, adds comments, changes byline, dateline; previous LONDON)

By Sam Forgione

NEW YORK, July 28 (Reuters) - The U.S. dollar edged lower against a basket of major currencies on Monday, halting last week's strongest advance since March but still hovering near six-month highs as traders awaited a glut of economic data and policy releases.

The dollar fell slightly against the euro but still traded near eight-month highs against the shared currency ahead of Wednesday's release of U.S. second-quarter gross domestic product growth and a Federal Reserve policy announcement. Traders also eyed Friday's report of U.S. nonfarm payrolls growth for July.

"This is the calm before the storm," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York. He said there were "no incentives" to sell the euro or buy the dollar before this week's top economic data.

Traders are watching the Fed closely for hints of a more hawkish monetary policy after a two-day policy meeting ends on Wednesday. Economists forecast U.S. GDP grew 3 percent in the second quarter after a sharp contraction of 2.9 percent in the first quarter, and expect U.S. employers to have added 233,000 jobs in July, according to Reuters polls.

Stronger-than-expected U.S. data on services sector activity on Monday had little impact on major currencies. Financial data firm Markit said its preliminary services Purchasing Managers Index was 61.0 in July, unchanged from June and above expectations for a reading of 59.8.

The National Association of Realtors (NAR) said Monday that contracts to buy previously-owned U.S. homes unexpectedly fell in June. NAR's Pending Home Sales Index, based on contracts signed last month, fell 1.1 percent to 102.7 and confounded economists' expectations for a 0.5 percent gain.

"The pending home sales data adds fuel to the possibility of weaker-than-expected second quarter U.S. GDP growth," said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York. He said the data underpinned the dollar's slight weakness against major currencies on Monday.

The euro last traded 0.05 percent higher against the dollar at $1.3436, modestly above an eight-month low of $1.34210 touched on Friday. The dollar was last down 0.08 percent against the Japanese yen at 101.775, and was down 0.07 percent against the Swiss franc at 0.90395 franc.

The U.S. dollar index, which measures the dollar against a basket of six major currencies, was last down 0.04 percent at 80.996. U.S. government bond yields stabilized after dropping on Friday, with the benchmark 10-year U.S. Treasury note flat in price to yield 2.47 percent. (Reporting by Sam Forgione; Editing by Nick Zieminski)

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