Credit: Reuters/Rick Wilking
Four thousand U.S. dollars are counted out by a banker counting currency at a bank in Westminster, Colorado November 3, 2009.
Though the U.S. Commerce Department reported the first quarterly contraction in the U.S. economy in three years, foreign exchange traders focused on signs U.S. economic activity has shrugged off the chilling effects of North America's harsh winter.
'Once you get beyond the headline number, and look under the hood, things don't really look so bad,' said Boris Schlossberg, managing director of FX strategy at BMO Capital Markets in New York. 'Inventories were to blame for a lot of it and that bodes well for the future.'
The dollar, which had given back many of its gains on Wednesday against the euro and the British pound, reclaimed some of the day's losses after the GDP report.
The euro, which touched a three-month low under $1.36 this week as expectations solidified for a multi-pronged attack on monetary policy by the European Central Bank next week, stood at $1.3607 in New York trading for a gain against the dollar of 0.13 percent. Just before the GDP report, the euro was up 0.2 percent.
The U.S. dollar index, composed of six currency pairs, was off 0.08 percent in late morning after being down 0.17 percent ahead of the GDP report, which was issued simultaneously with Labor Department data showing fewer claims for unemployment benefits.
'The forward-looking view of the world's biggest economy looks much rosier, particularly after solid U.S. data this week on durable goods and consumer confidence,' said senior analyst Joe Manimbo at Western Union Business Solutions in Washington. 'Better data of late suggest the U.S. economy has since rediscovered the gas pedal with expectations of near or above 3 percent growth for the second quarter.'
In other foreign exchange trading, the Australian dollar jumped more than half a percent on data showing business investment spending plans for 2014/15 have jumped to A$137 billion from an earlier estimate of A$125 billion.
'The interesting thing about the Australian economy is that it is showing some signs of divergence away from China,' said Christian Lawrence, a currency strategist at Rabobank in London.
'There is an increasing feeling that Australia can weather the slowdown in China better than people previously thought.'
The Aussie, which is up 4.15 percent year to date, touched a high on Thursday of $0.9312 and was last at $0.9283, up 0.52 percent for the day.
(Editing by W Simon)
Entities 0 Name: U.S. Count: 6 1 Name: China Count: 2 2 Name: New York Count: 2 3 Name: Labor Department Count: 1 4 Name: Rabobank Count: 1 5 Name: Australia Count: 1 6 Name: Colorado Count: 1 7 Name: Christian Lawrence Count: 1 8 Name: Western Union Business Solutions Count: 1 9 Name: Washington Count: 1 10 Name: Joe Manimbo Count: 1 11 Name: North America Count: 1 12 Name: European Central Bank Count: 1 13 Name: Boris Schlossberg Count: 1 14 Name: Reuters\/Rick Wilking Four Count: 1 15 Name: Simon Count: 1 16 Name: London Count: 1 17 Name: BMO Capital Markets Count: 1 18 Name: Australian Count: 1 19 Name: U.S. Commerce Department Count: 1 Related 0 Url: http://ift.tt/1nWZ4a1 Title: Frustrated dollar bulls not giving up yet Description: Luismmolina | istock/360 | Getty Images This year has been trying for dollar bulls betting on stellar greenback gains, but they're not giving up yet. Measured against a basket of currencies of the U.S's main trading partners, the dollar hovered near a two-month high on Thursday, benefiting in part from weakness in the euro which has come under pressure from talk of a cut in euro zone interest rates in June.
