Dollar records best week in 1-1/2 months on strong data


NEW YORK: The dollar recorded its best week since early November after a series of strong U.S. economic data releases that make a near-term cut in interest rates unlikely.
U.S. growth nudged up in the third quarter, the government confirmed on Friday, and there are signs the economy maintained the moderate pace of expansion as the year ended, supported by a strong labor market.
Gross domestic product increased at a 2.1% annualized rate, the Commerce Department said on Friday in its third estimate of third-quarter GDP. That was unrevised from November’s estimate in line with economists’ expectations. Consumer spending was stronger than previously reported, and there were upgrades to business spending.
Earlier this week, the U.S. reported that the domestic homebuilding market was regaining steam and the manufacturing sector was stabilizing. That has driven the dollar index .DXY up 0.56% this week. It was last up 0.35% on the day to 97.724.
The GDP and personal consumption figures are “indicators of the strength of the economy going into 2020,” wrote analysts at Western Union Business Solutions. These figures “further strengthen the belief that the Federal Reserve will pause on interest rate cuts for the near future,” they wrote.
Sterling was slightly stronger on the day after a bad week that has seen it take a beating from renewed concern over a hard Brexit. After hitting a 19-month high against the dollar last week on the back of Conservative Party leader Boris Johnson’s electoral victory in Britain, the currency dropped when the new prime minister revived the possibility that Britain could leave the European Union without a trade agreement.
The pound GBP= was last 0.03% stronger against the dollar, at $1.301, and up 0.48% against the euro EURGBP= at 0.851 pence. Nevertheless, the currency was set for its worst week against the greenback in over two years, and its largest weekly loss since July 2017 versus the euro.
More than three years since Britain voted to exit the European Union in a 2016 referendum, Johnson’s government will leave the EU at the end of January and has set December 2020 as a hard deadline to reach a trade agreement.
In thin pre-holiday trade, the euro weakened by 0.43% to $1.107 EUR=, while the Japanese yen was 0.11% weaker against the dollar at 109.48 yen JPY=.