(Bloomberg) -- The dollar gauge extended its decline Thursday.
- The euro ticked up after a unanimous decision by the European Central Bank to cut rates by 25 basis points eased concerns that some policymakers would argue for a bigger reduction. The common currency later drifted lower and was recently little changed.
- EUR/USD traded near 1.0421, it was up as much as 0.4%
- ECB President Christine Lagarde said the decision was unanimous
- “We know the direction of travel,” Lagarde said. “For those who would like to have this solid forward guidance, it would be totally unrealistic to do anything of that nature, simply because we are facing significant and probably rising uncertainty at the moment.”
- Bloomberg Dollar Spot Index fell as much as 0.4%, later paring the move
- With this week’s ECB and the Federal Reserve decisions out of the way, traders now position for President Donald Trump potentially announcing new tariff plans on Feb. 1
- Month-end flows were also weighing on the greenback
- Inflation-adjusted gross domestic product increased an annualized 2.3% in the fourth quarter after rising 3.1% in the prior three-month period, according to the government’s initial estimate published Thursday
- The median forecast in a Bloomberg survey of economists called for a 2.6% growth
- This GDP miss is an important factor, according to Helen Given, a foreign-exchange trader at Monex
- “Traders look at that and see the chance for the Fed to cut earlier than Q3,” she said
- USD/JPY fell 0.5% to 154.44; the Bank of Japan made a significant step toward shrinking its massive balance sheet last week, underscoring Governor Kazuo Ueda’s determination to slowly but steadily proceed with the normalization of policy
- Deputy Governor Ryozo Himino reiterated the central bank will hike interest rates if its economic and price outlook is realized
- GBP/USD was little changed near 1.2455
Reporting by Anya Andrianova and Vassilis Karamanis
