Dollar higher as US economic growth accelerates – Reuters

Japanese yen and US dollar banknotes are seen in this illustrated photo taken on September 23, 2022. REUTERS/Florence Lo/Illustration/File Photo Obtaining license rights

NEW YORK, Oct 26 (Reuters) – The U.S. dollar weakened on Thursday after data showed the U.S. economy grew at its fastest pace in nearly two years in the third quarter, once again defying dire warnings of recession. rose slightly against a basket of currencies. This continues even after 2022.

The Bureau of Economic Analysis of the Department of Commerce has released preliminary estimates of the gross domestic product (GDP) growth rate for the third quarter, showing that gross domestic product (GDP) grew at an annual rate of 4.9% in the previous quarter, the highest since the fourth quarter of 2021. announced that it was the fastest. Economists polled by Reuters had expected GDP to rise by 4.3%.

The dollar index, which measures the stock’s strength against a basket of six competitors, rose 0.0% to 106.58. The index hit a nearly three-week high of 106.89 in early trading.

“It reinforces the message that the U.S. is somehow stuck economically and inflation remains somewhat stubborn,” said Brad Bechtel, global head of foreign exchange at Jefferies in New York.

“At the last minute, that supports the dollar,” Bechtel said.

The GDP figures were released based on business activity data released earlier this week that highlighted the strength of the US economy compared to the UK and the European Union.

“The strong third-quarter GDP results reflect market tensions between positive indicators on the one hand and interest rate hikes and a tougher outlook from the Fed on the other,” Brian Rose, senior U.S. economist at UBS, said in a note. “We are strengthening this,” he said.

“Market volatility is likely to continue until investors are confident that the economy is cooling but not collapsing and that the interest rate shock is over,” Rose said.

Meanwhile, the European Central Bank left interest rates on hold as expected on Thursday, ending an unprecedented 10th consecutive rate hike, while insisting talk of rate cuts was premature.

“This statement is very similar to the statement from September. Obviously they had to acknowledge the fact that inflation had fallen, which was what they expected, but at the end of the day they still They’re trying to hold on to some kind of hawkish bias that inflation is continuing to be ‘too high,”’ said Francesco Pesole, a foreign exchange strategist at ING in London.

The euro fell 0.03% to $1.0564.

The Japanese yen hit a one-year low of 150.78 yen to the dollar, falling far short of the 32-year low of 151.94 yen hit in October last year, which led to foreign exchange market intervention by the Japanese authorities. Ta.

Japan’s Finance Minister Shunichi Suzuki earlier said authorities were closely monitoring developments and warned traders not to sell the yen again. He did not comment directly on possible intervention.

Pressure is mounting on the Bank of Japan to change government bond yield rules next week following a recent rise in global interest rates.

Japan’s low yields have made the currency an easy target for short selling and financing deals, and the widening gap in interest rates between Japan and the U.S. has helped keep the yen weak.

Jefferies’ Bechtel said whether Japanese authorities intervene in the foreign exchange market will depend not only on the level of yen trading but also on yen volatility. The Bank of Japan is scheduled to hold a financial meeting on October 30-31.

“Maybe they’re just waiting for that event to go away,” Bechtel said.

The Australian dollar rose 0.3% to $0.633. It hit a one-year low of $0.6271 in early trading.

The governor of Australia’s central bank said on Thursday that Australia’s unexpectedly high inflation rate on Wednesday was close to what policymakers expected, and that the bank was still considering whether a rate hike was justified.

Among cryptocurrencies, Bitcoin fell 1.2% to $34,084. The world’s largest cryptocurrency soared 14% this week on speculation that an exchange-traded Bitcoin fund could soon be launched.

Report by Saqib Iqbal Ahmed. Additional reporting by Samuel Indyk in London and Ankur Banerjee in Singapore.Editing: Edwina Gibbs, Lincoln Feast, Deborah Kibrikosios, Jonathan Oatis, Diane Craft

Our standards: Thomson Reuters Trust Principles.

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