The US dollar was mostly flat against its major-traded peers with the notable exception of the Great Britain pound that demonstrated a substantial rally against the greenback, erasing the previous week’s losses. There were two important events for the US currency during the week, and one turned to be supportive while the other one was not so much.
The positive event was the monetary policy meeting of the Federal Reserve. While the Fed did not hint at exact timing of an interest rate hike, the statement was considered hawkish enough for traders to continue pricing in the possibility of a September hike.
The negative event was the release of the GDP data. It is true that growth of US gross domestic product accelerated markedly from the first quarter (as to be expected after the harsh winter), but the economic expansion still fell short of expectations.
With important fundamental factors mixed, it is not surprising to see the currency end this week’s trading virtually flat against its peers. The sterling was an exception, boosted versus the dollar by expectations of monetary tightening in the United Kingdom.
EUR/USD ended the week at 1.0983, basically at the opening level. USD/JPY closed at 123.93 after opening at 123.75. Yet GBP/USD rallied from 1.5520 to 1.5621.
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