Dollar Drifts Lower On Weak GDP Data, Powell's Comments

(RTTNews) - The U.S. dollar turned weak against some of its major counterparts on Thursday, weighed down by data showing a drop in U.S. GDP in the latest quarter, and hopes that the Fed might slowdown the pace of interest rate hikes in the coming months.

Data released by the Commerce Department showed a continued contraction in U.S. economic activity in the second quarter of 2022. The data said real gross domestic product decreased by 0.9% in the second quarter after slumping by 1.6% in the first quarter. Economists had expected GDP to increase by 0.5%.

With GDP unexpectedly declining for the second consecutive quarter, the data signals the U.S. economy is in a technical recession.

Meanwhile, a separate report from the Labor Department showed initial jobless claims edged down to 256,000 in the week ended July 23rd, a decrease of 5,000 from the previous week's revised level of 261,000. Economists had expected jobless claims to inch up to 253,000 from the 251,000 originally reported for the previous week.

After announcing another 75-bps rate hike at the end of a two-day policy meeting on Wednesday, Fed Chief Jerome Powell hinted at a slowdown in the pace of rate hikes at future meetings.

Powell said the next move will depend on incoming data.

The Fed's next monetary policy meeting is scheduled for September 20-21, with CME Group's FedWatch tool currently indicating a 59.2% chance of a 50-basis point rate hike and a 36.7% chance of another 75-basis points rate hike.

The dollar index is at 106.23, down 0.21% from the previous close.

Against the Euro, the dollar is trading at $1.0194, up marginally from $1.0198.

The dollar is trading at $1.2176 against Pound Sterling, weakening from $1.2156.

Against the Japanese currency, the dollar has dropped to 134.24 yen from Wednesday's closing level of 136.60 yen.

The dollar is slightly up against the Aussie at 0.6988. Against Swiss franc, the dollar has shed ground, fetching CHF 0.9547 a unit, as against CHF 0.9602 on Wednesday.

The Canadian currency is up slightly at C$1.2814 a dollar, recovering from C$1.2871.