NEW YORK: The dollar rose on Friday and was tracking toward an 11th straight week of gains against a basket of currencies, which would extend the longest winning streak for the greenback since its 1971 free float under President Richard Nixon.
The dollar index got extra lift from upwardly revised US gross domestic product data, adding 0.4 percent and hitting a fresh four-year peak of 85.521 even as strategists and traders predicted a pullback in the dollar rally.
The euro, which has fallen sharply against the dollar since May as economic growth in the euro zone has sputtered and US prospects have brightened, was off 0.35 percent against the dollar and last traded at $1.2702.
Currency rallies rarely extend uninterrupted, with just a handful having lasted beyond eight weeks since the 1970s, according to currencies strategist Martin Schwerdtfeger at TD Securities in Toronto.
"Given the impressive rally in the dollar we have seen over the last 2-1/2 months, we wouldn't be surprised if we see a little bit of a pause," Schwerdtfeger said. "That doesn't mean we will have any significant retracement."
A growing divergence of market interest rates on either side of the Atlantic also favors the dollar, whose gains on Friday widened after the US Commerce Department reported the US economy grew at its strongest rate in 2-1/2 years during April, May and June. Department economists raised GDP estimates to show the economy expanded at a 4.6 percent annual rate during the second quarter, which would be the strongest performance since the fourth quarter of 2011.
The data reflected a faster pace of business spending and sturdier export growth than previously estimated, providing a firmer base for growth in the current third quarter.
"This should help soothe some investor worries that US growth momentum would have trouble being sustained, as other major economies remain stuck in the mud," Gennadiy Goldberg, US strategist for TD Securities in New York, told clients.
The dollar rose 0.40 percent to 109.21 yen after slipping as low as 108.47, off last week's six-year high of 109.46 yen. Japan's welfare minister pushed the yen lower by quelling speculation that reform of the country's giant pension fund would be delayed.
The changes are expected to result in more investment being channelled into Japanese equities and overseas assets and have hurt the yen.
"Fundamentally we see USD outperformance as one of the strongest G10 stories in the fourth quarter," said Josh O'Byrne, a strategist at US bank Citi.
"There is still considerable room before a complete recovery (is in place), but demand for US assets is on the rise."
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