Dollar Nears One-Week High Amid Positive U.S. Economic Data

The dollar surged to a one-week high against major currencies as strong U.S. economic data reduced expectations for significant Federal Reserve interest rate cuts. The euro weakened while the yen held steady. Revised GDP figures showed a stronger U.S. consumer, influencing market sentiment and currency movements.

The dollar edged close to a one-week high against major currencies on Friday, driven by robust U.S. economic data that tempered expectations for aggressive Federal Reserve interest rate cuts. The euro lingered near a two-week low, influenced by slowing inflation in Germany and Spain which may prompt European Central Bank easing.

Meanwhile, the yen remained near the key 145 per dollar mark following a dip on Thursday, as the greenback tracked rising U.S. Treasury yields. New data indicated Tokyo's core consumer prices climbed by a faster-than-anticipated 2.4% in August, yet remained largely unnoticed by the yen.

Significantly, U.S. GDP grew at an annualized rate of 3.0% in the second quarter, revising upwards from the previously reported 2.8%. This data was a market mover, affecting both currency values and U.S. Treasury yields, as noted by Rodrigo Catril, senior FX strategist at National Australia Bank. The resilience of the U.S. consumer bolstered the belief in the country's economic exceptionalism during Q2.