Dollar slips on data

NEW YORK:

The US dollar slipped from a three-month high against the yen and fell against the euro yesterday after federal government data showing a deceleration in US consumer spending in the third quarter overshadowed a stronger-thanexpected overall economic growth reading. Gross domestic product increased at a 2.9 percent annual rate, accelerating from a 1.4 percent pace in the second quarter, the Commerce Department said in its first estimate. That was the strongest growth rate since the third quarter of 2014.

Consumer spending, however, increased at a 2.1 percent rate, slowing from the second quarter’s robust 4.3 percent pace. Consumer spending accounts for more than two-thirds of US economic activity. Analysts said the reading could be viewed as tepid given the consumer spending component and therefore did not further reinforce traders’ confidence that the Federal Reserve would raise interest rates in December.

“What I think the Fed watches is not the GDP number per se, but final domestic demand, and that is the GDP number minus inventories and minus exports, and in that case the U.S. economy actually slowed down from Q2,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York. Analysts said the dollar was struggling to gain further since expectations that the Fed will raise interest rates in December have already largely been expressed in the greenback’s rally this month.