The US economy contracted at an annualized rate of 0.9% in the second quarter, the US Bureau of Economic Analysis' (BEA) first estimate showed on Thursday. This reading came in much worse than the market expectation for an expansion of 0.5%.

"The decrease in real GDP reflected decreases in private inventory investment, residential fixed investment, federal government spending, state and local government spending, and nonresidential fixed investment that were partly offset by increases in exports and personal consumption expenditures (PCE)," the BEA explained in its publication. "Imports, which are a subtraction in the calculation of GDP, increased."

Market reaction

With the initial reaction, the US Dollar Index lost its traction and erased a large portion of its daily recovery gains. As of writing, the index was up 0.15% on the day at 106.60.