FOREX-Dollar set to extend winning streak on U.S. data, Fed outlook

* Dollar index on track to extend winning monthly streak

* Euro rebounds from 1-month low vs dollar, 3-week low vs yen

* Greenback cuts losses as Q4 GDP revised down less than expected

* Swedish crown rises to one-month high after GDP data (Updates market action, changes dateline, previous LONDON)

By Richard Leong

NEW YORK, Feb 27 (Reuters) – The dollar index dipped on Friday on month-end selling but remained on track for a record eighth month of gains on improving U.S. data and comments from Federal Reserve officials that bolstered bets for a interest rate rise later this year.

This measure of the greenback against euro, yen and four other currencies was set to mark its longest streak of monthly gains since the greenback was floated as a fiat currency in 1971. February’s gains, however, were the smallest of the eight months.

The selling in the dollar followed a rally on Thursday, as more evidence suggested the United States will expand in the coming months although its growth would unlikely accelerate and inflation would stay muted.

“The trend is still in place to support the dollar,” said Eric Viloria, currency strategist at Wells Fargo Securities in New York.

The dollar index eased from its one-month high set on Thursday, last down 0.22 percent at 95.086.

The greenback fell from its one-month peak versus the euro, down 0.2 percent at $ 1.1221, but firmed 0.1 percent against the yen at 119.575 yen.

The euro rebounded from a three-week low versus the yen, last up 0.3 percent at 134.160 yen.

The government said on Friday it downgraded fourth-quarter U.S. gross domestic product growth to a 2.2 percent annual pace from an initial estimate of 2.6 percent. Economists polled by Reuters forecast a revision down to 2.1 percent.

The better-than-expected reading coincided with encouraging figures on U.S. pending home sales and consumer sentiment, though a surprise drop in a private index on U.S. Midwest business activity to its weakest since July 2009 revived some worries about slowing U.S. growth.

Amid this backdrop of moderate economic expansion, the Federal Reserve has shown it would be “patient” on ending its near-zero interest rate policy. Fed Chair Janet Yellen reiterated this stance at her semiannual testimony before Congress this week.

Other top U.S. central bank officials signaled the Fed’s path towards normalizing monetary policy remains on track for later this year, but the pace of rate increases will likely be gradual as inflation has been stuck below the Fed’s 2 percent target.

Among other currencies, the Swedish crown rose to a one-month high of 9.3250 crowns per euro after data showed the economy grew at its fastest pace in more than three years in the fourth quarter. The strong crown has complicated Riksbank’s effort to combat deflation. It was last down 0.6 percent at 9.3600 crowns per euro in U.S. trading.

(Additional reporting by Anirban Nag in London; Masayuki Kitano in Tokyo; Editing by Catherine Evans and Meredith Mazzilli)

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