Forex - U.S. Dollar Rises After GDP Slows Slightly in Q2

The U.S. dollar was stronger against other currencies on Friday after growth in the U.S. economy slowed less than expected, though trade tensions weighed on business.

Second-quarter gross domestic product (GDP) increased at an annual rate of 2.1% from 3.1% in the first quarter, compared to estimates for 1.8% growth. Consumer spending rose 4.3%, while exports dropped 5.2% and imports inched up just 0.1%, indicating trade tensions between the U.S. and China are weighing on expansion.

The numbers support the case for the Federal Reserve to be less aggressive on easing monetary policy, with investor expectations for rates falling 50 basis points this year cut to 19.4% and odds for three cuts dipping slightly.

The Fed is expected to cut interest rates by at least 25 basis points at its next policy meeting on July 31.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, rose 0.1% to 97.667by 9:04 AM ET (13:04 GMT).

The dollar rose against the Japanese yen, with USD/JPY up 0.1% to 108.68.

Sterling continued to fall to a one-and-a-half week low as uncertainty over Brexit cast a long shadow. Prime Minister Boris Johnson’s promise to renegotiate Brexit were rejected by EU officials on Thursday, with outgoing European Commission President Jean-Claude Juncker saying the current deal is “the best and only deal possible.”

GBP/USD fell 0.3% to 1.2415, while EUR/USD slipped 0.1% to 1.1130, and USD/CAD gained 0.2% to 1.3186.