Early trade in New York: dollar rises on US data, tax plan

The dollar edged higher on Thursday after two days of losses in light trading, lifted by generally positive US data and a tax overhaul plan that could prompt the Federal Reserve to raise interest rates at a faster-than-expected pace. Still, the US currency was on track to post its worst yearly performance in 14 years.
That said, the medium-term outlook for the dollar has turned a little more positive than what many on Wall Street had priced in, with expected rate hikes from the Fed next year and, at the very least, modest benefits from the US tax program. US economic data of late, for instance, has become more dollar supportive.
Data showed on Thursday that the US economy grew at 3.2 percent in the third quarter, its fastest pace in more than two years, boosted by robust business spending and poised for what could be a lift next year from sweeping tax cuts passed by Congress this week. The Philadelphia Fed business conditions index for December was solid, with a higher-than-expected reading of 26.2.
"The GDP (gross domestic product) data came in slightly less than expected, but it's still a really good number," said John Doyle, director of markets at Tempus Consulting in Washington. "At the same time, you take that with the Philly Fed which was better than expected, and the outlook for GDP going forward especially with tax reform has provided a modest boost to the dollar."
In mid-morning trading, the dollar was slightly higher against a basket of major currencies at 93.352. The euro was modestly lower at $1.1864, having gained around 1 percent so far this week, supported by a rise in German bond yields. The dollar was last little changed at 113.40 yen.