Dollar falls on soft U.S. sentiment, personal spending data

Shutterstock photo - - The dollar traded lower against most major currencies on Friday after U.S. consumer sentiment and personal spending numbers disappointed investors just one day after data revealed the U.S. economy contracted more than expected in the first quarter of the year.

In U.S. trading on Friday, EUR/USD was up 0.22% at 1.3632.

The revised Thomson Reuters/University of Michigan consumer sentiment index ticked up to 81.9 this month from 81.8 in April, missing market expectations for a reading of 82.5.

While harsh winter weather dampened spirits, concerns wages will remain weak did more so.

"The May decline in consumer confidence was not due to the dismal state of the economy during the 1st quarter, which had the weakest pace of GDP growth in three years. Consumers thought the harsh winter weather was mainly responsible," the indicator's statement read.

Consumer sentiment would suffer more if the economy failed to rebound in the months ahead, though the survey revealed that consumers feel the economy will be strong enough to produce more jobs in the year ahead.

"The main concern expressed by consumers involved dismal prospects for wage growth. Tiny wage gains meant that nearly half of all households anticipated declines in inflation-adjusted incomes during the year ahead," the statement read.

Elsewhere, the Commerce Department reported that personal spending in the U.S. fell 0.1% last month, compared to expectations for a 0.2% rise, after a 1.0% increase in March, whose figure was revised from a previously estimated 0.9% gain.

U.S. core personal consumption expenditures, which exclude food and energy, rose 0.2% in April, in line with expectations, after a 0.2% increase the previous month.

Separately, industry data revealed that the Chicago purchasing managers' index rose to a seven-month high of 65.5 in May, from 63.0 in March, confounding expectations for a fall to 61.0.

On Thursday, the Bureau of Economic Analysis reported that the U.S. economy contracted 1.0% in the first quarter after a preliminary estimate showed growth of 0.1%.

Market expectations had been for a 0.5% contraction. It was the first decline in U.S. GDP since the first quarter of 2011, and the dollar softened on the news, reminding investors that even when the Federal Reserve winds down stimulus programs, rate hikes won't come for some time afterwards.

Meanwhile across the Atlantic Ocean, official data showed that German retail sales fell 0.9% last month, confounding expectations for a 0.4% rise, after a 0.1% uptick in April, whose figure was revised from a previously estimated 0.7% fall.

The dollar was flat against the yen, with USD/JPY trading at 101.79 and down against the Swiss franc, with USD/CHF down 0.30% at 0.8954.

The greenback was down against the pound, with GBP/USD up 0.28% at 1.6763.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.06% at 1.0842, AUD/USD down 0.01% at 0.9307 and NZD/USD up 0.08% at 0.8493.

In Canada, official data showed that the gross domestic product expanded by 0.1% in March, in line with market expectations, after a 0.2% expansion in February.

A separate report showed that raw materials prices rose 0.1% in April, disappointing expectations for a 1.2% increase, after an upwardly revised 0.7% gain the previous month.

Earlier Friday, data showed that building consents in New Zealand rose 1.5% in April, confounding expectations for a 3.5% drop, after an upwardly revised 9.2% increase in March.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.12% at 80.43. offers an extensive set of professional tools for the financial markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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