Dollar pushes lower after downbeat U.S. growth report

Investing.com - The dollar pushed lower against the other major currencies on Friday, after data showed that the U.S. economy expanded at a slower rate than expected in the second quarter, while the lack of action by the Bank of Japan and the Federal Reserve continued to weigh.

In an advance report, the Bureau of Economic Analysis said U.S. gross domestic product rose 1.2% in the second quarter, disappointing expectations for a 2.6% increase. The U.S. economy grew 0.8% in the first quarter, whose figure was revised from a previously estimated growth rate of 1.1%.

Employment costs rose 0.6% in the last quarter, in line with expectations.

Meanwhile, real consumer spending increased by 4.2% in the three months to June, after an upwardly revised 1.6% gain in the previous quarter.

USD/JPY plummeted 2.07% to trade at a three-week low of 103.09.

At the conclusion of its monthly policy meeting on Friday, the BoJ announced a modest increase in purchases of exchange-traded funds (ETFs), but maintained its base money target at 80 trillion yen as well as the pace of purchases for other assets.

The central bank also kept negative interest rates unchanged at -0.1%.

The move disappointed expectations for a stimulus package of nearly 28 trillion yen promised by Prime Minister Shinzo Abe earlier in the week to boost the economy.

The policy statement came after the Fed left interest rates unchanged at the conclusion of its two-day policy meeting on Wednesday.

EUR/USD climbed 0.51% to 1.1133.

In a preliminary report, Eurostat said on Friday that the euro zone’s consumer price index rose at an annualized rate of 0.2% in July, exceeding expectations for a 0.1% uptick and after a 0.1% gain the previous month.

Core CPI, which excludes food, energy, alcohol and tobacco, increased by 0.9% last month, year-on-year, in line with expectations.

GBP/USD up 0.20% to 1.3189, while USD/CHF dropped 0.83% to 0.9729.

The Bank of England reported that net lending to individuals rose to £5.2 billion in June from £4.5 billion in May, whose figure was upwardly revised from a previously estimated £4.3 billion.

Analysts had expected net lending to individuals to rise to hit £4.2 billion last month.

But the pound’s gains were capped as investors turned to the BoE’s policy meeting next week amid growing expectations for a rate cut.

The Australian and New Zealand dollars were stronger, with AUD/USD up 0.43% at 0.7535 and with NZD/USD rallying 0.92% to 0.7136.

Elsewhere, USD/CAD pulled back from session highs and held steady at 1.3151 after Statistics Canada said the country’s GDP fell 0.6% in May, compared to expectations for a 0.4% slip and after a growth rate of 0.1% the previous month.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.69% at 96.02, the lowest level since July 15.