U.S. dollar was broadly lower on Friday as a combination of underwhelming U.S. economic data and political uncertainty kept traders biased toward the euro and other world currencies.
The euro hit a session high after the release of U.S. second-quarter gross domestic product estimates that largely met economists’ expectations.
Some analysts pointed to a smaller-than-expected increase in U.S. labor costs, but others suggested the data was just an excuse for traders to continue the weak dollar trade that has sent the U.S. currency lower for much of this year.
U.S. gross domestic product growth picked up to 2.6 percent in the second quarter, matching expectations of economists polled by Reuters, while growth in the first quarter was revised down to 1.2 percent.
“I think this just removes an obstacle,” said Marc Chandler, chief global currency strategist at Brown Brothers Harriman & Co. “The euro bottomed yesterday in New York trading and its been climbing ever since. If anything, the GDP number pushed an open door.”
The euro has risen nearly three percent against the dollar so far this month and more than 11.5 percent in the year to date. It is on track for its third weekly gain in a row and the fourth in five weeks. On Friday, the euro moved higher against the dollar, and was last up 0.7 percent at $1.1756. On Thursday, the euro rose to its highest against the greenback in 2-1/2 years before retreating in later trading.
The weakness of the dollar has been most evident against the euro this year, but it has fallen against most major currencies as expectations for U.S. fiscal stimulus and an increased pace of overnight interest rate hikes from the Federal Reserve have dissipated.
“The dollar was rising last year on the basis of the U.S. being seen as probably the first major central bank to engage in a monetary policy tightening bias,” said Tom Hainlin, national investment strategist at U.S. Bank.
“Then ultimately we saw almost a synchronized amount of talk coming from major central banks that the U.S. wasn’t the only game in town in terms of slowing its easing bias or even tightening.”
The U.S. Senate’s failure to pass a repeal of the 2010 Affordable Care Act overnight also hurt the greenback, analysts said.
The dollar fell 0.9 percent to C$1.2436 against the Canadian dollar after Canada’s May GDP growth was triple what economists had expected, rising 0.6 percent for the month and 4.6 percent year over year.