Dollar Edges Higher; U.S. GDP Quarterly Data Due By Investing.com

By Peter Nurse

Investing.com – The U.S. dollar edged higher in early European trade Thursday, but remained near a one-month low amid concerns aggressive tightening by the Federal Reserve may already be slowing economic growth.

At 3:05 AM ET (0705 GMT), the , which tracks the greenback against a basket of six other currencies, traded marginally higher to 102.095, still below the two-decade high above 105 seen in the middle of May.

The from the early May Fed meeting, released Wednesday, indicated that the central bank policymakers will be sticking to a plan to by a half-percentage point at its next two meetings starting next month, largely as expected.

However, they also largely ruled out even more aggressive tightening while also creating the possibility of a pause in rate hikes, after the June and July increases, something that Atlanta Federal Reserve President Raphael Bostic suggested earlier in the week.

The scaling back of Fed tightening bets has followed slowing economic growth, with falling almost 17% last month and retailers reporting disappointing results as consumers scale back discretionary spending as the prices of essentials like food and petrol soar.

Attention later in the session will turn to the release of the first quarter U.S. number, which is expected to show a drop of 1.3%, and weekly data.

“We think that the downside potential for the dollar is shrinking, especially given a more balanced positioning after a widespread position squaring and a still supportive Fed story,” said analysts at ING, in a note.

fell 0.2% to 1.0664, with the single currency handing back some of earlier gains after European Central Bank President Christine Lagarde signaled an end to negative in the Eurozone in the third quarter.

fell 0.1% to 1.2558, dropped 0.1% to 127.22, while the risk-sensitive sank 0.3% to 0.7070. fell 0.3% to 0.6458, shedding most of the gains following Wednesday’s Reserve Bank of New Zealand meeting.

Elsewhere, rose 0.1% to 16.3788, with economists expecting the Turkish central bank to keep its benchmark interest rate unchanged at 14% at its policy-setting meeting later Thursday, even as inflation soared.

Russia’s central bank is also set to hold an extraordinary rate-setting meeting later Thursday, the day after the country’s declined 0.02% after rising 0.05% in the previous week, according to data from statistics service Rosstat.

In annual terms, slowed to 17.51% from 17.69% a week earlier, and this could help the central bank make the decision to lower its key from 14%.