The euro rallied after the dollar was weakened by a disappointing report on U.S. economic growth which raised expectations for more monetary easing from the Federal Reserve. GDP grew by much less than expected in the first quarter of this year, expanding by 2.2 percent , falling short of the 2.6 percent consensus forecast. A third round of Fed quantitative easing would be negative for the dollar. EURUSD held onto gains after surging to 1.3269, the highest level since April 3.
The broadly weaker dollar weighed on the ICE Dollar Index, which measures the greenback against a basket of currencies. The index fell to as low as 78.704, its lowest level since April 3.
GBPUSD advanced further in the US trading session to peak at a new eight-month high of 1.6278. Sterling has been steadily rising in the past two weeks against the dollar, gaining almost 3 percent. Helping buoy the pound is the view that the Bank of England is less keen to introduce further stimulus measures, such as quantitative easing, which is usually negative for the currency.
The dollar was weaker against the Swiss franc, especially after Swiss National Bank Chairman Thomas Jordan said today there were no plans to introduce negative interest rates to counter the strong Swiss franc. USDCHF fell to 0.9050, the lowest since April 3.
In New York trading, the dollar extended its fall against the yen. USDJPY fell to 80.20, compared to an early day high of 81.41. The euro also traded at 106.23 yen, down from 107.45 yen. The Bank of Japan announced policy easing measures earlier today, but it was not quite the bazooka that markets were expecting. Some investors had prepositioned for a more aggressive BOJ, and some investors are cutting back shorts.
Gold gained on weaker dollar, since the two assets have an inverse price relationship. Spot gold climbed to $1,667.38, the highest in two weeks.
Crude oil reached a two-week high, peaking at $104.98, mainly helped by rising U.S. equities markets. U.S. stocks rose on strong earnings reports. S&P 500 closed above 1,400 for the first time since April 3 and the Nasdaq Composite rallying 2.3 percent for the week.