The US dollar extended a drop against the euro on Thursday, despite data that revealed the US economy was stronger than previously estimated in the first quarter of 2017. An index that tracks the strength of the greenback against other main counterparts touched its weakest level today since October 2016 as the US currency continued to tumble lower.
According to a fresh report from the Bureau of Economic Analysis, higher consumer spending and stronger exports supported the US economy in the first quarter of the year. Gross domestic product grew at an annualized rate of 1.4% in the quarter, according to the bureauâs third and final estimate. The final estimate was 0.2% stronger than the second one as more data became available over the past month, beating analyst estimates of a reading at 1.2%.
However, the first quarter growth was the worst since the second quarter of 2016, and followed a 2.1% increase in the fourth quarter of last year. Lower government spending and weaker inventory investment worked against positive contributions from personal consumption expenditure and residential fixed investment. Imports, which negatively impact gross domestic product, decreased in the first quarter.
The stronger final estimate for gross domestic product in the first quarter was still far from the Trump administrationâs target for economic growth at 3.0%. Trump plans to use cuts to corporate taxes, rollbacks of financial and environmental regulations, and higher infrastructure spending to boost the economy. However, the presidentâs economic agenda has yet to be implemented five months into his presidency. Economic growth was last sustained at an average rate of 3.0% in the 1990s.
The US economy grew 1.6% in 2016, the slowest rate in five years. Growth in the second quarter of 2017, which was initially expected to accelerate, may have remained weak amid disappointing manufacturing production, inflation, and retail sales in recent months.
EUR/USD traded at 1.1429 as of 18:50 GMT on Thursday, after rising to 1.1443 at 18:00 GMT, the pairâs highest level since October 2016. EUR/USD began trading today at 1.1379. USD/CAD was at 1.3015 after dropping to 1.2986 at 14:50 GMT, the weakest level since February 6. USD/CAD started the day at 1.3034.
The Dollar Index, which tracks the performance of the US currency against its major peers, declined to 95.63 as of 18:52 GMT today from 96.01 yesterday.
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