The dollar weakened against its peers today following the release of data which revealed that US growth decelerated greater than forecast for the 1st quarter which pushed back predictions for a rate increase by the Federal Reserve leading up to the Fed’s statement later in the day. US GDP expanded merely 0.2% in the 1st quarter after having gained 2.2% in the last quarter of 2014 marking its weakest rate of expansion in 1 year.

The Federal Reserve in its statement highlighted the labor market and other areas which are lagging economically indicating that it was not in a hurry to increase interest rates any time soon. Following the statement the greenback bounced back somewhat after the US dollar index had already lost over 1.25% before its release but was still down on the day.

Leading up to the Fed’s statement the euro strengthened against the dollar with the pair rallying over 1.5% to 8 week highs trading just under its 1.11 handle. The euro was supported by data which revealed that German consumer prices increased at an annual rate of 0.4% in April matching forecasts which lessened worry over the risk of deflation within the euro zone. Other data revealed that private sector bank lending in the euro zone increased in March after no uptick during the last 3 years and forecasts for consumer inflation climbed for the first time this year.

The pound strengthened against the dollar to 2 month highs with the pair trading just below its 1.55 handle as demand for the greenback lessened leading up to the Fed’s statement. The Nationwide Building Society of the UK released data which revealed that its house price index gained 1% in April ahead of forecasts for a 0.2% increase following a 0.1% uptick the previous month. The pound was stronger against the euro.

The yen held its ground against the dollar trading within its tight range of less than 1 big figure. Market volatility following the Fed’s statement pushed the pair above its 119 handle. While the dollar weakened considerably against the euro and the pound the yen remained within a tight range of around 70 pips for the majority of the session. The Bank of Japan is scheduled to convene tomorrow and since the market anticipates no further changes to its monetary policy the impetus for the pair to break out of its current range may have to originate in the US.

The Australian and New Zealand dollars strengthened against the greenback. Statistics New Zealand released data which revealed that New Zealand’s trade surplus increased from NZD 50 million in February to NZD 631 million in March while experts had forecast a surplus of NZD 341 million.

The Canadian dollar strengthened to 3 month highs against the greenback with the pair losing over 0.5% on the back of US GDP data and as the market awaited the Fed’s statement. Canadian raw material prices declined 0.9% in March while experts forecast a 1.8% decrease.

Disclaimer: This information has been prepared to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information.