The U.S. dollar index was little changed at 101.40, after gaining 0.36% on Thursday and hitting the highest since August 22 at 101.58
The dollar traded near a one-week high versus major peers on Friday, on track to snap a five-week losing streak, after robust economic data pared bets for aggressive Fed interest rate cuts.
The euro stayed near a two-week low to the dollar as easing inflation in Germany and Spain supported the case for ECB easing.
The yen held near the closely watched 145 per dollar level after softening on Thursday, as the dollar tracked a gain in U.S. Treasury yields.
The Japanese currency largely ignored data on Friday showing core consumer prices in Tokyo jumping at a faster-than-expected 2.4% in August, again topping the BoJ’s 2% target, although a measure that also strips out energy costs increased by just 1.6%.
Overnight, U.S. data showed GDP grew a 3.0% annualised rate in the second quarter, an upward revision from the 2.8% rate reported last month.
That has been the market mover from the price action overnight, particularly when you look at currencies and U.S. Treasury yields, said Rodrigo Catril, senior FX strategist at National Australia Bank, referring to the GDP figure.
The takeaway there – the highlight – is that the consumer was stronger than had previously been thought, he said. The exceptionalism of the U.S. was still evident in the second quarter.
Traders now more strongly favour a quarter-point Fed rate cut on September 18, laying only 34% odds of a 50bp cut, down from 38% a day earlier, shows the CME Group’s FedWatch Tool.
The U.S. dollar index was little changed at 101.40 as of 0505 GMT, after gaining 0.36% on Thursday and hitting the highest since August 22 at 101.58.
It is on course for a 0.7% gain this week, which would be its best week since the start of April. Over August though, it is set for a decline of nearly 2.5%, which would be its worst month since November.
The dollar declined 0.13% to 144.80 yen, after adding 145.55 overnight for the first time since August 23.
