Dollar buoyed by signs of solid U.S. economy, pound ticks up

Tokyo, The dollar held firm at the start of a holiday-thinned week on Monday, as US data pointed to solid economic growth while the British pound bounced slightly after having suffered its biggest weekly fall in three years.

A batch of economic data published on Friday showed the US economy, already in its longest expansion in history, appears to have maintained the moderate pace of growth as the year ended, supported by a strong labor market, Reuters reported.

Gross domestic product increased at a 2.1% annualised rate, the Commerce Department said in its third estimate of third-quarter GDP. That was unrevised from November’s estimate.

The US economy appears to have stopped slowing. There is no indication it will be hitting a recession, said Ayako Sera, market economist at Sumitomo Mitsui Trust Bank.

Earlier this year, investors were spooked by fears over the possibility of a US recession when the US yield curve inverted, which has been historically one of the most reliable signs of a US downturn.

Separate data showed consumer spending, which accounts for more than two-thirds of US economic activity, rose 0.4% last month as households stepped up purchases of motor vehicles and spent more on healthcare.

That contrasted with an unexpected deterioration in German consumer sentiment.

The euro stood at $1.10778 EUR=, little changed on the day but in retreat since it hit a four-month high of $1.12 on December 13.

The dollar index =USD was at 97.659, flat on the day but maintaining its recovery trend since hitting a five-month low of 96.605 on December 12.

The dollar has been supported by optimism over the global economy since Washington and Beijing came to an interim trade agreement earlier this month.

Source: Bahrain News Agency