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USD: Dollar builds momentum on upbeat GDP

H.S. Borji
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USD: Dollar builds momentum on upbeat GDP

The US dollar advanced against a basket of currencies Thursday, as the world’s largest economy maintained a solid growth pace in the third quarter.

The US dollar index, a weighted average of the greenback against the euro, yen, pound, loonie, krona and Swiss franc, advanced 0.23 percent to 86.15, easing off an intraday high of 86.49. The dollar surged Wednesday after the Federal Reserve announced it was putting an end to its record bond buying program.

In economic data, US gross domestic product grew at an annual rate of 3.5 percent in the third quarter, following a 4.6 percent gain in the second quarter, the Commerce Department revealed today. Economists forecast a gain of just 3 percent after a series of mixed reports over the past few months.

A separate report from the Labor Department showed initial jobless claims edged up slightly last week, although this did very little to curb enthusiasm about the job market.

The number of workers filing for first-time unemployment benefits increased 3,000 to a seasonally adjusted 287,000 in the week ending October 25. Economists forecast a slight drop to 283,000. The less volatile four-week moving average for jobless claims decreased 250 to 281,000, official data showed.

The number of Americans continuing to receive jobless benefits increased 34,000 to 2.384 million in the week ending October 18, official data showed. The insured unemployment rate was unchanged at 1.8 percent.

Economists expect a firmer job market in October, as the US economy is projected to have added more than 200,000 nonfarm payrolls for the seventh time in eight months. Employers added 248,000 workers to payrolls in September, as the unemployment rate plunged to a six-year low of 5.9 percent.

The Commerce Department will close out the week with a report on personal income and outlays for September. Personal income had increased $47.3 billion, or 0.3 percent, in August, helping to drive up consumer spending, which increased $57.5 billion or 0.5 percent.

Economists forecast personal income to increase 0.3 percent in September. Consumption expenditures are forecast to edge up 0.1 percent.

The dollar strengthened against the euro, as the EURUSD traded within a range of 1.2549-1.2639. The pair consolidated at 1.2616, declining 0.17 percent. The daily chart shows initial support at 1.2584. On the upside, resistance is ascending from 1.2725.

In Eurozone news, German consumer prices declined faster than forecast in October. The consumer price index declined 0.3 percent month-on-month, according to preliminary data from the Federal Statistics office. This translates into an annual CPI rate of 0.8 percent.

Separately, Germany’s unemployment rate held steady at 6.7 percent in October, official data showed.

The dollar was little changed against the yen, as the USDJPY traded near three-week highs. The pair consolidated at 108.80. The pair faces initial support at 108.22 and resistance at 109.27.

The greenback was little changed against the Canadian dollar, as the USDCAD consolidated at 1.1182. The pair faces initial support at 1.127 and resistance at 1.1233.

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