Dollar sees a weekly increase while the US economy remains strong

27 Oct 2023 , 09:50 AM

Strong U.S. GDP data that supported higher-for-longer interest rates helped the dollar march towards a weekly gain on Friday, as the yen lingered around 150 per dollar ahead of a crucial policy meeting the following week.

According to figures released on Thursday, the third quarter had the strongest rate of growth in the American economy in almost two years, driven by rising wages as a result of a competitive job market and strong consumer spending.

This increased speculation that the Federal Reserve would maintain tight monetary policy for an extended period of time, which would raise the value of the dollar relative to a basket of other currencies.

After reaching a three-week high of 106.89 in the previous session, the U.S. dollar index remained stable at 106.57 and was expected to gain roughly 0.4% for the week.

Although it was not too far from a three-week low of $1.2070 set on Thursday, sterling increased by 0.07% to $1.21355.

With a 0.02% decline to $1.0560, the euro was on track for a weekly loss of almost 0.3%.

As anticipated, the European Central Bank (ECB) ended an extraordinary run of ten straight rate hikes on Thursday by leaving interest rates unchanged.

Data from earlier this week revealed that corporate activity in the euro zone unexpectedly declined this month.

According to analysts, the dollar was also supported by some safe-haven movements, with Asia continuing Wall Street’s cautious risk-taking attitude, which caused stocks to decline and kept US Treasury bonds at a premium.

Frequently employed as a stand-in for risk appetite, the Australian dollar increased by 0.24% to $0.6337 on Thursday after plunging to a one-year low of $0.6271 on Thursday.

In a similar vein, the kiwi hovered at an 11-month low before closing 0.1% higher at $0.5825.

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