#XMINDO_FX Market - June 30 The U.S Dollar was weaker against major rivals on Friday, falling to its lowest level in five weeks, as signs U.S. economic growth is stalling damped speculation the Federal Reserve might raise interest rates sooner than anticipated. Data last week included a sharper-than-expected revision to the economy’s first quarter contraction, which showed the economy shrank by 2.9% in the period. That could be viewed as reaffirming the Federal Reserve’s commitment to keeping interest rates low even after the end of its bond-buying program later this year. Consumer spending, which accounts for about 70 percent of the economy, increased less than forecast in May, and orders for U.S. durable goods unexpectedly fell, other reports showed. Consumer sentiment rose this month, reversing a chunk of the prior month’s drop, with cheerier views about current conditions, according to data released Friday. Most economists also think the U.S. economy will expand by 3% in the second half of the year, but that’s based on the assumption inflation-adjusted incomes will rise and encourage Americans to spend more. Federal Reserve Bank of St. Louis President James Bullard on Sunday said the markets are correct in looking past the “shockingly negative” estimate of first-quarter economic growth reported this past week amid other signs that the economy is improving. Bullard said he expected that the economy would grow at around 3% for the rest of the year, and that unemployment would fall below 6% in the second half. He also said that the Fed’s preferred measure of inflation could approach its 2% target by year-end. Regarding the overall health of the economy, Bullard said, “Both financial markets and the public at large doesn’t realize how close we are to normal, compared with postwar history.” Those conditions would support an increase in short-term interest rates at the end of the first quarter in 2015, said Bullard, though he added that the assessment would put him ahead of many other members of the Federal Open Market Committee. Bullard is a nonvoting member of the policy-setting panel. The Dollar Index, which tracks the performance of the U.S Dollar versus a basket of six other major currencies, was down 0.250% at 80.012. xmindofx/market-news
Posted on: Mon, 30 Jun 2014 11:15:35 +0000
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