The dollar gained across the board on Friday after generally upbeat US economic data revived some expectations that the Federal Reserve could consider raising interest rates again this year. The dollar index, a measure of the greenback's value against six major currencies, was on track for its best weekly performance since November. Against the yen, the dollar rose to a more than one-week high.
Friday's data showed that US economic growth slowed in the fourth quarter, but not as sharply as anticipated, while consumer spending rose last month. Those reports if followed by another robust US nonfarm payrolls report next week should put rate hikes back on the Fed's agenda. "The fact that GDP was revised higher is a positive for the dollar this morning ... giving confidence to markets that the Fed may resume its tightening policy this year," said Sireen Harajli, currency strategist at Mizuho Bank Ltd in New York.
The dollar index rose 1.0 percent to a three-week high of 98.260. The euro, meanwhile, was down 0.7 percent at $1.0917 after falling to a three-week low of $1.0912. Further boosting the dollar was a report showing US consumer spending rose 0.5 percent last month, higher than the forecast of a 0.3 percent gain. More importantly, the core PCE index, an inflation indicator keenly watched by the Fed, inched higher to 0.3 percent. The dollar also gained against the yen, climbing 0.7 percent to 113.805 yen, breaking the Japanese currency's streak of gains. The yen, however, was still on track for its best month in more than seven years. Sterling was down 0.7 percent against the dollar at $1.3865, on track for its heaviest weekly losses in almost six years, with traders concerned Britons will vote to leave the European Union in a June 23 referendum.
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