Dollar broadly lower ahead of fresh data; Pound erases gains

Dollar broadly lower ahead of fresh data; Pound erases gains

13 May 2015, 13:34
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On Wednesday the dollar was broadly lower against its peers, as markets awaited U.S. data on retail sales due later in the trading session.

Sterling erased its gains after the Bank of England cut its growth forecast for 2015.

EUR/USD was up 0.11% to 1.1224, after rising to highs of 1.1265 earlier in the day.

The common currency slightly after official data showed that euro area gross domestic product grew 0.4% in the first three months of the year, up from 0.3% in the final quarter of 2014 but slightly below forecasts for growth of 0.5%.

On a year-over-year basis, the area's GDP grew 1.0% after a 0.9% expansion in the three months to December while economists had forecast growth of 1.1%.

In the first quarter, the French economy grew 0.6%, the fastest rate of growth in two years, while Germany’s economy grew 0.3% in the first quarter, slowing from 0.7% in the previous quarter. Data also showed that the euro zone's industrial production slipped 0.3% in March, confounding expectations for a 0.2% rise. February's figure was revised to a 1.0% gain from a previously estimated increase of 1.1%.

GBP/USD was steady at 1.5664, down from five-month highs of 1.5743 earlier in the session.

The pound declined after U.K.'s central bank cut its forecast for growth this year to 2.4%, down from 2.9% three months ago, also revising down forecasts for 2016 and 2017 to 2.6% and 2.4% respectively.

The Bank of England also said it expects inflation, which currently stands at a record-low zero, to return to its 2% target in two years' time, little changed from its last report.

Earlier Wednesday, the U.K. Office for National Statistics said the unemployment rate ticked down to 5.5% last month from 5.6% in March, hitting the lowest level since September 2008, in line with expectations. The data indicated that the U.K. claimant count change dropped by 12,600 in April, confounding expectations for a 20,000 decline. March's figure was revised to a 16,700 fall from a previously estimated drop of 20,700.

The greenback declined against the Swiss franc, with USD/CHF sliding 0.15% to 0.9280.

The dollar was steady against the yen, with USD/JPY at 119.80.

The Australian and New Zealand dollars were higher, with AUD/NZD up 0.60% to 0.8023 and NZD/USD rallying 1.09% to 0.7442.

Earlier, in its biannual Financial Stability Report, the Reserve Bank of New Zealand said that the New Zealand dollar was "above its sustainable level."

"We still think the exchange rate is unjustified and unsustainable and we'd like to see a movement downwards in the exchange rate," said RBNZ Governor Graeme Wheeler when commenting on the report.

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