Early trade in New York: strong data sets dollar up for best week in 1-1/2 months

The dollar firmed against other major currencies on Friday and was set for its best week since early November after a series of strong US economic data releases which make a near-term cut in interest rates unlikely.

US growth nudged up in the third quarter, the government confirmed on Friday, and there are signs the economy more or less maintained the moderate pace of expansion as the year ended, supported by a strong labour 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, however, was stronger than previously reported, and there were upgrades to business spending.

Earlier this week, the US reported that the domestic homebuilding market was regaining steam and the manufacturing sector was stabilizing. That has driven the dollar index up 0.43% this week. It was last up 0.22% on the day to 97.595.

This morning's 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."

The pound was last 0.47% stronger against the dollar, at $1.307 and up 0.81% against the euro at 0.848 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.

In thin pre-holiday trade, the euro weakened by 0.33% to $1.108, while the Japanese yen was roughly unchanged against the dollar at 109.36 yen.