Weaker Dollar Whipsaws Versus Euro
The dollar rebounded from early losses against the euro on Thursday, as traders assessed rapid-fire developments in the ongoing euro zone debt crisis.
However, the buck continued to weaken against the sterling and lost modest ground to the yen following another dismal batch of U.S. economic data.
The euro came under renewed pressure after an important official said the International Monetary Fund may not release its portion of aid to Greece next month.
Jean-Claude Juncker, who heads up euro zone finance ministers, said Greece must convince the IMF that it can rollover its debt for a full year.
Earlier in the day, investors welcomed a report in the Financial Times suggesting that China may snap up a significant portion of the euro zone’s Portugal rescue bonds in June.
With the markets unsure of how to play the headlines coming out of Europe, the dollar was stable against the euro.
The buck bounced back to $1.41 after slipping to $1.42 earlier in the day. Still, the dollar was off this week’s 2-month peak of $1.3967.
On the flip side, the dollar tumbled to $1.6375 versus the sterling. The buck has dropped sharply since hitting a 2-month peak near $1.6050 on Monday.
The dollar also dropped against the yen, falling to Y81.20, at the lower end of a tight trading range.
Disappointing first quarter growth figures raised speculation the Federal Reserve will keep interest rates on hold near zero through at least this year.
U.S. GDP increased by 1.8 percent in the first quarter, unchanged from the advance estimate provided a month ago. Economists had been expecting the pace of GDP growth to be upwardly revised to 2.1 percent.
The number of Americans filing new applications for unemployment insurance increased unexpectedly, according to figures released Thursday by the Labor Department.
424,000 Americans filed their initial claims for unemployment insurance for the week ending May 21, an increase of 10,000 from the previous week’s revised figure of 414,000.
