USD gains following stronger US data

Daily Currency Update

The US dollar edged higher against the euro on Thursday after data showed the US economy maintained a strong pace of growth in Q4, backing the case for the Federal Reserve to maintain its aggressive stance for longer.

Gross domestic product increased at a 2.9% annualized rate last quarter and followed growth at a 3.2% pace in the third quarter. Economists had forecast GDP rising at a 2.6% rate.

However, inflation is still well above target and unemployment is at a cycle low, there are signs that the US economy is responding to tighter monetary policy and the Fed will be aware of fears that increasing rates too hard and fast risks toppling the economy into recession.