Dollar hits two-week peaks as US data fuels Fed taper talk

Sha Ying | CNBC

The dollar hit a two-week peak on Thursday, and was on track for its largest daily gain against the euro in more than four months after strong U.S. data emboldened the view that the Federal Reserve could next month begin winding down its stimulus program.

Investors bought the greenback after data showed the U.S. economy accelerated sharply in the second quarter thanks to a surge in exports. U.S. GDP grew at a 2.5 percent annual rate in the April-June period, more than double the pace clocked in the prior three months.

The dollar was last 0.6 percent higher against a basket of currencies at 81.96, after earlier hitting 82.067, its highest since Aug. 5. Against the safe-haven Japanese yen, the greenback traded up 0.6 percent at 98.26 yen.

The euro, meanwhile, plunged 0.7 percent against the dollar to $1.3241, on pace for its worst daily performance since mid-April. It earlier touched a low of $1.3218, a two-week trough.

Market sentiment was still cautious, but prospects of an imminent Western intervention looked set to be delayed until U.N. investigators report back. Some said reduced tension in emerging markets also supported the U.S. currency as it reinforced bets the Fed would crimp monetary stimulus soon.

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