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Dollar hits 18-month high as euro slips on rate divergence
The US dollar was supported by an upward revision to second-quarter GDP growth to 2.2% and stronger personal consumer spending.
The US dollar climbed to an 18-month high, driven by strong US macroeconomic data, a further rise in bond yields, and a rebound in oil prices, while the euro slipped out of its recent range, according to Action Forex.
The outlet cited a revision to second-quarter GDP growth from 1.6% to 2.2%, saying it showed the US economy expanding faster than Europe and able to handle higher interest rates, along with a 0.9% jump in August personal consumer spending that exceeded forecasts.
Action Forex also noted that the move did not immediately accelerate the core price index, which remained at 3.0% year-on-year, but markets refocused on the idea that current rates are still well above the 2% target.
For commodities-linked support, the outlet pointed to Goldman Sachs estimates that Middle East oil exports, including grey-market flows, reached 23.3 million barrels per day, and added that with oil prices elevated, the risk of spillover into core inflation could increase expectations for more aggressive Fed tightening, supporting the dollar further.