The dollar shot up against the euro and most other currencies on Wednesday after data revealed the U.S. economy grew far more than expected in the second quarter than investors were anticipating.

In U.S. trading, EUR/USD was down 0.23% at 1.3378, up from a session low of 1.3367 and off a high of 1.3416.

The pair was likely to find support at 1.3318, the low from Nov. 8, and resistance at 1.3444, Tuesday's high.

The Commerce Department reported earlier that gross domestic product expanded at an annual rate of 4.0% in the three months to June, blowing past forecasts for a 3.0% reading. The contraction in the first quarter was revised to 2.1% from a previously reported 2.9%.

Personal consumption grew 2.5%, well above predictions of 1.9%, the report said, adding to the view that the economic recovery is gaining traction.

The robust data offset a report from payroll processor ADP revealing that the U.S. private sector added 218,000 jobs in July, missing forecasts for a 230,000 reading.

Investors kept an eye towards the Federal Reserve, which was due to release its statement on interest rates and monetary policy later in the day.

Meanwhile in Europe, the euro came under pressure due to ongoing concerns that the European Central Bank remains poised to loosen policy while the Federal Reserve and other central banks are looking towards tightening.

Data released earlier revealed that Spain’s economy grew 0.6% in the second quarter, beating expectations for a 0.5% reading though consumer prices fell unexpectedly in July, underling concerns over the threat of deflationary pressures in the euro area.

Another report showed that the annual rate of inflation in Germany slowed to 0.8% this month from 1% in June.

Elsewhere, the euro was flat against the pound, with EUR/GBP down 0.01% at 0.7913, and up against the yen, with EUR/JPY up 0.46% at 137.56.

On Thursday, the euro zone is to release preliminary data on consumer inflation and unemployment, while Germany is to publish data on retail sales and unemployment.

The U.S. is to release the weekly report on initial jobless claims, as well as data on manufacturing activity in the Chicago area.

Start Trading
Follow us in social networks!
Live Chat
Leave feedback