Investing.com - The dollar hit fresh 14-month lows against the euro on Wednesday and trimmed gains against the yen after data showed that the U.S. economy contracted unexpectedly in the fourth quarter and investors awaited the outcome of the Federal Reserve’s latest policy meeting.
During U.S. morning trade, the dollar pulled back from two-and-a-half year highs against the yen, with USD/JPY up 0.34% to 91.01, down from session highs of 91.41.
The Commerce Department said the U.S. economy contracted by 0.1% in the fourth quarter, confounding expectations for growth of 1.1% and a sharp slowdown from growth of 3.1% in the preceding quarter.
The unexpected contraction was attributed to a 6.6% decline in government spending and a significant drop in private inventories. However, the report said consumer spending rose by 2.2% and business investment was 8.8% higher.
The data came after a report by payroll processor ADP showed that the U.S. private sector added 192,000 jobs in January, above expectations for an increase of 165,000.
Market participants were awaiting the Fed’s rate statement later in the session. The U.S. central bank was widely expected to reaffirm its commitment to its easing program until the unemployment rate falls below 6.5%.
In Japan, Prime Minister Shinzo Abe rejected criticism that Japan’s fiscal and monetary stimulus program was aimed at weakening the yen on Wednesday, saying the measures were aimed at combating deflation.
The greenback was at 14-month lows against the euro, with EUR/USD advancing 0.53% to 1.3564 as sentiment on the single currency continued to be underpinned by indications that the worst of the crisis in the euro zone is over.
The euro shrugged off data showing that Spain’s economy contracted by 0.7% in the three months to December, bringing the annualized rate of contraction to a larger-than-forecast 1.8%.
The greenback hit session lows against the pound, with USD/GBP up 0.19% to 1.5792.
Sterling found support earlier after data showed that net lending to individuals in the U.K. rose to the highest level since April last month, while mortgage approvals rose to 56,000 from 54,000 in November.
The dollar fell to an almost three-week low against the Swiss franc, with USD/CHF dropping 0.99% to 0.9122.
The greenback was broadly higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD rising 0.18% to 1.0027, AUD/USD falling 0.52% to 1.0419 and NZD/USD skidding 0.94% to 0.8314.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.36% to 79.32.
During U.S. morning trade, the dollar pulled back from two-and-a-half year highs against the yen, with USD/JPY up 0.34% to 91.01, down from session highs of 91.41.
The Commerce Department said the U.S. economy contracted by 0.1% in the fourth quarter, confounding expectations for growth of 1.1% and a sharp slowdown from growth of 3.1% in the preceding quarter.
The unexpected contraction was attributed to a 6.6% decline in government spending and a significant drop in private inventories. However, the report said consumer spending rose by 2.2% and business investment was 8.8% higher.
The data came after a report by payroll processor ADP showed that the U.S. private sector added 192,000 jobs in January, above expectations for an increase of 165,000.
Market participants were awaiting the Fed’s rate statement later in the session. The U.S. central bank was widely expected to reaffirm its commitment to its easing program until the unemployment rate falls below 6.5%.
In Japan, Prime Minister Shinzo Abe rejected criticism that Japan’s fiscal and monetary stimulus program was aimed at weakening the yen on Wednesday, saying the measures were aimed at combating deflation.
The greenback was at 14-month lows against the euro, with EUR/USD advancing 0.53% to 1.3564 as sentiment on the single currency continued to be underpinned by indications that the worst of the crisis in the euro zone is over.
The euro shrugged off data showing that Spain’s economy contracted by 0.7% in the three months to December, bringing the annualized rate of contraction to a larger-than-forecast 1.8%.
The greenback hit session lows against the pound, with USD/GBP up 0.19% to 1.5792.
Sterling found support earlier after data showed that net lending to individuals in the U.K. rose to the highest level since April last month, while mortgage approvals rose to 56,000 from 54,000 in November.
The dollar fell to an almost three-week low against the Swiss franc, with USD/CHF dropping 0.99% to 0.9122.
The greenback was broadly higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD rising 0.18% to 1.0027, AUD/USD falling 0.52% to 1.0419 and NZD/USD skidding 0.94% to 0.8314.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.36% to 79.32.