The dollar grew by the fastest pace in six months against a pool of major counterparts on strong U.S. economic data that fuelled speculation the Federal Reserve is on the right track to increase interest rates in 2015.
The euro remained slightly unchanged at $1.3427 after earlier falling to $1.3367, its weakest level since November 12. The yen plunged versus the dollar for the third straight week, retreating 0.8 percent to trade at 102.61. The Japanese currency tumbled 0.7 percent to 137.78 per euro, while the pound extended its losses for the fourth week, falling 0.9 percent to $1.6821.
“The dollar has been performing very well in recent weeks on the back of stronger data,” Robert Lynch, a New York-based currency strategist at HSBC Holdings Plc in New York, told Bloomberg last Friday. “I don’t see anything in the data that suggests deviation from the expectation the Fed will raise rates in the middle of 2015.”
The U.S. economy surged in the second quarter, increasing 4 percent after declining 2.1 percent in the January-March quarter. Consumer spending in June increased by the fastest pace in three months, with household spending rising 0.4 percent after advancing 0.3 percent in May. The positive economic data spurred bets that the Fed may hike interest rates sooner than expected.
Despite this, the Federal Open Market Committee insists that there exists some slack in the jobs market. Moreover, U.S. employers absorbed fewer workers than expected in July, hiring 209,000 workers compared to the expected 230,000 in a Bloomberg survey. The unemployment rate rose to 6.2 percent, up from 6.1 percent in June. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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