Dollar advances on better US economic growth
NEW YORK CITY – The dollar Thursday advanced against other major currencies after a surprisingly upward revision of second-quarter US economic growth that revived expectations that the Federal Reserve will scale back its stimulus.
Near 2100 GMT, the euro traded at $1.3241, down from $1.3338 Wednesday.
The dollar bought 98.32 yen compared with 97.63 yen.
The euro fell to 130.18 yen from 130.23 yen.
Thursday’s US Commerce Department report estimated that the US economy grew by 2.5 percent in the second quarter, well above the 1.7 percent originally estimated and better than the 2.1 percent revision seen by many analysts.
The report showed better consumer spending and more favorable export and import data compared with the initial GDP report.
The strong GDP numbers improve the chances the Fed will taper its $85 billion a month bond-buying program, said Christopher Vecchio, currency analyst at DailyFX.
“With the US economy growing in line with the Federal Reserve’s forecasts from June, there is reason to believe that the Fed will move ahead with its plan to reduce the pace of QE3 next month,” Vecchio said.
Kathy Lien, managing director at BK Asset Management, said Thursday’s data put the Fed “on track” to taper the bond-buying program in September.
“Most policymakers have probably made their decision on when they want to taper and the only question is how much bond purchases should be reduced on a monthly basis,” Lien said.
The British pound slipped to $1.5503 from $1.5525 Wednesday.
The dollar rose to 0.9308 Swiss franc from 0.9220.