Dollar pares gains as US growth contracts for second quarter

NEW YORK, July 28 (Reuters) – The dollar pared gains on Thursday after data showed that the U.S. economy contracted again in the second quarter, fueling speculation that the Federal Reserve will not raise rates as high as previously expected.

Gross domestic product fell at a 0.9% annualized rate last quarter, the Commerce Department said in its advance estimate of GDP on Thursday. Economists polled by Reuters had forecast GDP rebounding at a 0.5% rate. read more

The second straight quarterly decline in GDP meets the standard definition of a recession. It comes as the Fed aggressively hikes rates in an attempt to choke off soaring inflation.

Register now for FREE unlimited access to


“For now the market is running with the idea that slowing growth will cause the Fed to blink and that we’re entering a recession,” said Mazen Issa, senior FX strategist at TD Securities in New York.

However, “the challenge here is that in order to…

Read more…