Dollar's Surge: Economic Power Struggle Amid U.S. Market Surprises
The dollar strengthened as unexpected U.S. economic data reduced market expectations for further Federal Reserve rate cuts. New tariffs unveiled by President Trump pressured the yen. With robust GDP growth and steady inflation, the Fed might proceed cautiously in adjusting rates. Consumer spending data remains critical for future monetary policy signals.
The U.S. dollar maintained significant gains on Friday, driven by unexpectedly positive economic data that challenged assumptions around the Federal Reserve's monetary policy easing this year.
The dollar index surged by 0.6% after U.S. growth, unemployment, durable goods, and wholesale inventories topped forecasts, while market focus shifted to upcoming consumer spending figures. This data could indicate the urgency of the Fed's need to inject further stimulus.
Meanwhile, President Trump's announcement of new tariffs rattled currency markets, pushing the yen to an eight-week low. As the euro slipped, analysts are recalculating the likelihood of a forthcoming Fed rate cut, now less certain amid economic resilience.
(With inputs from agencies.)
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