BS: Dollar Up Versus Yen as Growth Slows Less Than Forecast
The dollar rose to its highest level in four days against the yen after data showed U.S. economic growth slowed in the second quarter less than economists forecast.
The greenback erased losses against the euro amid speculation on what the Federal Reserve will do at its policy meeting next week. Investors have bet the central bank will take further steps to stimulate the economy, including a third round of debt purchases under quantitative easing.
“It doesn’t change anyone’s expectation of when QE3 will happen,” Charles St-Arnaud, a foreign-exchange strategist at Nomura Holdings Inc. in New York, said in a telephone interview. “It didn’t change anyone’s view on what the Fed will do in the near future.”
The dollar gained 0.2 percent to 78.35 yen at 9:04 a.m. New York time and touched 78.44 yen, the highest level since July 23. The greenback depreciated 0.2 percent to $1.2304 per euro after dropping as much as 0.4 percent earlier.
U.S. gross domestic product, the value of all goods and services produced, rose at a 1.5 percent annual rate after a revised 2 percent gain in the prior quarter, Commerce Department figures showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 1.4 percent increase.
The Fed will open a two-day meeting on July 31. While policy makers refrained from introducing a third round of asset purchases at their session last month, Fed Chairman Ben S. Bernanke indicated that it’s an option. The central bank purchased $2.3 trillion of securities from 2008 to 2011 in two rounds of a stimulus strategy called quantitative easing.
ECB, BOE
The European Central Bank and the Bank of England are also scheduled to meet next week.
The Dollar Index rose earlier after Germany’s Bundesbank said restarting the ECB’s bond-purchase program was not the best way to resolve the region’s debt crisis. The index fell yesterday amid speculation that European policy makers will take further action to preserve the euro amid a surge in sovereign borrowing costs in Spain and Italy. The shared currency has dropped this year versus most of its major counterparts on concern the region’s debt crisis is
The gauge slid to a two-month low on April 27 after Commerce Department data showed the economy expanded less than forecast in the first quarter of 2012. It advanced 0.7 percent to a six-month high on Jan. 29, 2010, when GDP for the fourth quarter of 2009 rose more than projected.
The index dropped 1.8 percent, the most in more than 15 months, on Oct. 27 after economic growth in the third quarter of 2011 matched the forecast.
The Fed policy meeting will follow data this month that showed U.S. payrolls growing less than forecast, retail sales declining and consumer prices little changed. Commerce Department figures showed on July 25 that demand for new U.S. homes unexpectedly dropped 8.4 percent in June from a two-year high to the weakest since January, a 350,000 annual rate.
To contact the reporter on this story: Joseph Ciolli in New York at jciolli@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
