Dollar Surges as U.S. Economy Shows Unexpected Growth

The U.S. dollar experienced gains against major currencies like the euro and yen after the Commerce Department revised the country's second-quarter GDP growth to 3.8%, surpassing economists' expectations of 3.3%. This unexpected economic growth could influence the Federal Reserve's decisions on future interest rate cuts.

Steve Englander of Standard Chartered Bank noted an imbalance in market expectations, suggesting that recent data shows separation between labor market weaknesses and GDP output, influencing interest rate forecasts. Despite last week's rate cuts by the Fed, the dollar index witnessed a rise, with traders anticipating further rate cuts, subject to new economic data.

Wall Street saw declines across major indices, while U.S. Treasury yields rose. Fed officials emphasized caution in cutting rates due to potential positive supply shocks and ongoing inflation concerns. Meanwhile, the dollar continued to gain against the Swiss franc, influenced by the Swiss National Bank's zero interest rate policy and trade tensions affecting Switzerland's economic outlook.

(With inputs from agencies.)