The dollar rose against the yen and reduced losses versus the euro on Thursday, after U.S. data showed that growth in the world’s largest economy was stronger than expected in the fourth quarter.
Prior to the data, the dollar index, a measure of the greenback’s value against six major currencies, had fallen to a three-week trough.
According to the Commerce Department report, U.S. gross domestic product increased at a 2.6 percent annualized rate in the fourth quarter after expanding at a 3.4 percent pace in the July-September period. Economists had been expecting growth of just 2.3 percent.
The economy grew 2.9 percent in 2018, the best performance since 2015 and better than the 2.2 percent logged in 2017.
“The GDP data supported the dollar and confirmed what the Federal Reserve has been saying all along that the U.S. economy is still growing at a solid pace, but is facing certain cross-currents such as slowing global growth and fading fiscal stimulus,” said Eric Viloria, FX strategist at Credit Agricole in New York.
He believes, however, that the report does not change the trajectory of Fed policy.
“Our economists have been forecasting one more U.S.(interest rate) hike this year, so there’s no real change to that. The GDP data is not a really surprise to the Fed,” Viloria added.
In morning trading, the dollar index was little changed at96.091 .DXY after earlier sliding to a three-week low. Traders said some of its weakness was caused by month-end selling after a strong month for risky assets.
Against the yen, the dollar rose 0.1 percent to 111.05 yen JPY= , turning positive after the U.S. GDP data.
The euro, meanwhile, was up 0.1 percent at $1.1383EUR= ,paring gains that took it to a three-week high.
Core European bond yields hit a three-week high on Wednesday while a broad indicator of European economic data .CESIEUR ticked higher, rising from an eight-month low hit last month, suggesting the near-term economic outlook may be improving.
Currency bid prices at 8:58 AM (1358 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Sourcehttps://www.nasdaq.com/article/forexdollar-gains-vs-yen-cuts-losses-vs-euro-after-us-q4-gdp-data-20190228-00772
