Dollar rises for 3rd day helped by US GDP report

[NEW YORK] The dollar surged for a third straight day Thursday, helped by a report on US growth in the second quarter that confirmed the economy is expanding at a moderate rate.

The dollar pushed up 0.4 per cent to US$1.0931 per euro and 0.13 per cent to 124.15 yen following the government's estimate that the US economy grew at an annual 2.3 per cent pace in the April-June quarter.

It also revised upward the first-quarter growth rate to 0.6 per cent, from a slight contraction in the previous estimate.

The numbers were strong enough to support expectations that the Federal Reserve will start to raise interest rates before the end of the year, according to analysts, but not so strong as to think that the Fed will accelerate its plan for a series of slow and small increases.

"Today's numbers are consistent with the Fed's moderately upbeat assessment of the economy and the high probability of a September increase in the federal funds rate - the first in nine years," said economist Nariman Behravesh of IHS.

The data is "not a sign that the Fed is step closer to raising rates in September, but it should keep the compass pointed in that direction," said Christopher Vecchio, currency analyst at DailyFX.

AFP