The dollar returned to gains against most of its major peers on Tuesday, as newly released data in the United States revealed that the growth rate of gross domestic product was stronger than previously expected during the third quarter.
The Bureau of Economic Analysis published a report earlier today, which included the Bureau’s second estimate for GDP growth in the third quarter of 2016. The growth rate was revised to 3.2% from 2.9% in a previous estimate that was made last month.
The Bureauâs revision was based on more complete source data becoming available, which added more clarity to the positive effect of exports, government spending, and private inventory investment. The third quarterâs growth is the fastest expansion in two years, and compares to 1.4% GDP growth in the second quarter of the year.
Investors became more certain that the Federal Reserve will accelerate its pace of raising interest rates following the data. The central bank will attempt to adjust its policy for the higher inflation rate that the economic plans and spending stimulus package of President-elect Donald Trump will start producing once he is in office in January 2016.
The dollar was further supported against the euro due to increasing concerns towards the Italian constitutional referendum, which will decide the future of reforms proposed by Prime Minister Matteo Renzi on December 4. If he lost the referendum, Renzi might resign from his position, which would create a complicated political situation in the country.
EUR/USD traded at 1.0640 as of 18:34 GMT today after touching 1.0568 at 13:30 GMT, the pairâs highest level in two days. EUR/USD started traded today at 1.0610.
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