Sun, Oct 30, 2005 - Page 10 News List

US dollar edges up on GDP numbers

AFP , NEW YORK

The US dollar pushed higher Friday, buoyed by news that the US economy beat expectations and expanded at an annual rate of 3.8 percent in the third quarter.

The euro fell to US$1.2068 at 9pm GMT after trading at US$1.2139 dollars late Thursday in New York. The US dollar edged up to ¥115.66 against ¥115.43 on Thursday.

The report on GDP in the world's biggest economy in the July-September period topped expectations of a 3.6 percent expansion, and showed acceleration from 3.3 percent in the previous quarter.

The report suggested the economy appears to have weathered the impact of hurricanes Katrina and Rita and a surge in energy costs.

"Ultimately, the rise in GDP shows that the US economy remains strong, despite two major hurricanes and continued interest rate increases," wrote analysts at Forex Capital Markets.

"Although the technical picture for the dollar is beginning to recede, the fundamental picture in the US remains kinder for the US currency on the basis of further Fed rate hikes, until the data begin to get the attention of the Treasury market," said Ashraf Laidi, chief currency analyst at MG Financial Group.

But the US growth report's details also convinced financial markets that the Fed would not turn more aggressive and may pause its rate-hike campaign next year.

It was the mildest rate for a core price increase since the second quarter of 2003.

The US dollar had been on shaky ground overseas with traders looking ahead to charges in an investigation of the role of some top White House aides over the leak of a CIA agent's identity.

US stocks firmed up their gains and the US dollar proved resolute after the charges were announced, largely because the indictment didn't as yet go beyond Libby, the chief of staff for Vice President Dick Cheney.

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