U.S. Dollar Rises after Disappointing GDP Data

NEW YORK, June 26 -- The U.S. dollar gained against most of other major currencies after the country's lower-than- expected gross domestic product (GDP) data for the first quarter in 2013 eased concerns that the Federal Reserve would start to cut stimulus program soon.

 

Real GDP of the world's largest economy increased at an annual rate of 1.8 percent in the first quarter of 2013, lower than the second estimate of 2.4 percent, missing analysts' expectations, according to the third estimate released Wednesday by the U.S. Commerce Department.

 

"A substantial revision to GDP in the third and final first quarter release was unexpected. The mix of growth was worse there was almost no change in inventories and consumption was the most heavily revised of the components," FTN Financial Chief Economist Christopher Low commented in a note on Wednesday.

 

Analysts believed that it would take considerable time for the Fed to retreat from its quantitative easing since the U.S. economy fared with fits and starts.

 

Minneapolis Fed President Narayana Kocherlakota said Wednesday morning on CNBC that spiking U.S. bond yields and stock market swings to the Fed's taper talk have been "outsized."

 

The euro weakened against the greenback as European Central Bank President Mario Draghi said Wednesday that the central bank's monetary policy will stay accommodative for the foreseeable future.

 

The British pound also fell against the U.S. dollar after top official from Bank of England suggested adopting more asset purchases.

 

In late New York trading, the euro dropped to 1.3004 dollars from 1.3090 dollars of the previous session and the British pound decreased to 1.5312 dollars from 1.5425 dollars. The Australian dollar slightly rose to 0.9263 dollars from 0.9262 dollars.

 

The dollar bought 97.87 Japanese yen, higher than 97.76 yen of the previous session. It edged up to 0.9435 Swiss francs from 0. 9377 Swiss francs and moved down to 1.0487 Canadian dollars from 1. 0517 Canadian dollars.