Dollar Gains on Strong U.S. Economic Data Despite Tariff Tensions

The dollar maintained its upward momentum on Friday following robust U.S. economic data that surpassed forecasts, tempering hopes for further Federal Reserve policy easing this year. In response, the dollar index was poised for its most significant weekly gain in two months, driven by unexpected strength in economic growth, unemployment claims, and inventory metrics.

The yen reached an eight-week low, impacted by newly announced U.S. tariffs. Market analysts are now focused on imminent U.S. consumer spending data to assess the necessity of further Federal Reserve support. According to Gavin Friend of the National Australia Bank, recent economic numbers suggest limited need for immediate rate cuts.

Despite a minor dip, the dollar index was set for a notable weekly climb. The greenback's rise against the yen marked a significant shift since early August, alongside modest euro gains against the dollar. As odds of a Fed interest rate cut in December dwindle, the latest economic reports hint at sustained inflation challenges, potentially guiding future monetary easing strategies.