The dollar surged higher versus major rivals Tuesday as data showing robust second quarter U.S. economic growth cemented expectations the Federal Reserve will hike interest rates before too long.
Some Fed members have said not look for tightening until the second half of 2015, but today’s blockbuster GDP figures are likely to be a game changer in determining monetary policy.
Powered but consumer spending, the U.S. economy expanded by the fastest pace in 11 years in the third quarter. The gross domestic product grew by 5 percent, up from a prior reading of 3.9 percent and an initial estimate of 3.5 percent.
The dollar raced to $1.2170 versus the euro, its highest in more than 28 months. The dollar extended recent gains versus the sterling, touching a new yearly high near $1.555.
A third day of gains took the dollar to Y120.70, nearing a 7-year high of Y122 from earlier in December.
A slew of economic data was overshadowed by the GDP figures as traders prepared to take a few days off for Christmas.
Data showed U.S. personal spending increased by 0.4 percent in November following an upwardly revised 0.3 percent increase in October.
Sales of new single-family houses in the U.S. unexpectedly decreased in the month of November, according to a report released by the Commerce Department on Tuesday.
The report said new home sales tumbled 1.6 percent to a seasonally adjusted annual rate of 438,000 in November from the revised October rate of 445,000.
The material has been provided by InstaForex Company – www.instaforex.com