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Dollar edges up from 10-month lows, gains seen capped

Dollar index pulls away from 10-month lows, upside seen limited

Investing.com - The dollar edged up from a 10-month trough against a currency basket on Monday after data showing that China’s economy gained momentum in the second quarter and concerns remained over the Federal Reserve’s plans to raise interest rates.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, ticked up 0.13% to 95.02 by 03.32 a.m. ET (07.32 a.m. GMT).

The index touched a 10-month low of 94.86 overnight after falling 0.69% on Friday.

China reported overnight that second-quarter gross domestic product expanded by an annualized 6.9%, driven by strong retail sales, industrial output and exports.

The data brightened the outlook for global growth because China is the world’s second largest economy.

The dollar was little changed against the yen, with USD/JPY at 112.58, after falling to a two-week low of 112.31 overnight.

The dollar weakened broadly on Friday, falling 0.6% against the yen after weak U.S. inflation and retail sales data added to doubts over the Fed’s plans for a third rate hike this year.

Fed policymakers have penciled in one more rate hike this year and another four in 2018.

The euro was a touch lower against the dollar, with EUR/USD slipping 0.13% to 1.1453, still within striking distance of the 14-month high of 1.1488 set last Wednesday.

Sterling edged lower, with GBP/USD last at 1.3031. The pound rallied 1.2% against the dollar on Friday, its largest one-day percentage gain in three months to a high of 1.3093.

The Australian and New Zealand dollars were also slightly lower, with AUD/USD easing 0.2% to 0.7813, off the 15-month high of 0.7832 set overnight as the upbeat Chinese data bolstered inflows into higher yielding assets.

NZD/USD slid 0.23% to 0.7329 after rising as high as 0.7361 earlier.

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