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Greenback drops on weak US GDP data (31.07.2017)

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Last week ended with reports on economic growth in the US and Canada. The greenback-loonie pair dynamics clearly shows data from what country investors favored the most. The Canadian dollar has been confidently gaining ground as the pair neared two-year lows. Besides GDP data, the Canadian currency was supported by rising crude prices. Analysts had projected higher growth rates, but the actual statistics turned out to be even stronger. In May, Canada’s economy expanded by 4.6 percent. At the same time, the US economy also showed a higher growth rate, but investors considered the data inconclusive. The US gross domestic product grew by 2.6 percent in the second quarter. The previous reading was revised downwards to 1.2 percent from 1.4 percent reported initially after three estimates. Weak growth in the US employment cost index creates more uncertainty about the stability of the US economy. The index registered a slowdown to 0.5% in the second quarter. This is a direct hint at the forthcoming slowdown in the consumer inflation. On the back of low inflation, the Fed is unlikely to decide to raise its key interest rate. So, the US dollar index headed towards recent lows, where it closed the trading session. The US dollar will most likely continue weakening next week. Stay tuned to the InstaForex TV channel to find out if it is true. https://www.instaforex.com
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