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US dollar rallies most in two months as economic growth tops forecast

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The dollar rallies the most in two months after a report showed the US economy grew faster than forecast in the fourth quarter.

[NEW YORK] The dollar rallies the most in two months after a report showed the US economy grew faster than forecast in the fourth quarter.

The greenback rose for a third day versus the yen, it's longest winning streak in almost a month, as a second reading of gross domestic product for the three months through December showed the economy grew at a one per cent annualized rate, compared with an initial estimate of 0.7 per cent.

The report helped offset a rising clamor of concern that US growth risks being dragged down by China's slowdown and stagnant inflation in the euro area and Japan.

Traders have pushed out expectations for interest-rate increases from the Federal Reserve as a result, and a Bloomberg gauge of the dollar remains poised for its biggest monthly loss since April 2015. Better-than-forecast economic data may change the tide.

sentifi.com

Market voices on:

"Everything is data-sensitive at this point," said Fabian Eliasson, head of US corporate foreign-exchange sales in New York at Mizuho Financial Group Inc.

"Anything that comes out that is better than what we expected gives the dollar a boost, based on the trajectory that the Fed might be tightening."

The dollar advanced 0.7 per cent to 113.78 yen as of 11:45 am in New York, capping its best week since the period ending Jan 29. The greenback added 0.7 per cent to US$1.0937 per euro.

The Bloomberg Dollar Spot Index, which tracks the US currency versus 10 peers, rose 0.7 per cent to 1,231.22, the biggest gain since Dec 17.

BLOOMBERG

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