TOKYO–The dollar paused in Asia on Wednesday after rallying on the back of data that showed U.S. economic growth at its highest level in over a decade. The greenback got a boost on Tuesday as the U.S. Commerce Department raised its estimate for third-quarter gross domestic product (GDP) growth from 3.9 percent to 5.0 percent, the best since 2003. The news fuelled hopes the U.S. Federal Reserve will start to raise interest rates from current record lows faster than other major central banks.
In Tokyo on Wednesday, the greenback bought 120.39 yen, dragged down from 120.71 yen in New York by profit taking, but still higher than the 120.13 yen touched Tuesday in Asian trade. The euro was mixed at US$1.2178 and 146.60 yen, from US$1.2171 and 146.94 yen in U.S. trade. Real personal spending increased 3.2 percent, accelerating from an increase of 2.5 percent in the second quarter, the data showed.
The ��rise in real personal spending had some analysts querying whether (fourth-quarter) GDP will also exceed three percent and asking whether the Fed may well commence its tightening ahead of mid-year,�� the bank said in a note. IG Securities market analyst Junichi Ishikawa said the dollar could even test the 121 yen level. ��There is a feeling in the market that the swing back to risk-taking sentiment has come earlier than expected,�� he told Dow Jones Newswires. The dollar was mixed against other Asia-Pacific currencies.
It edged up to 12,471.00 Indonesian rupiah from 12,463.80 rupiah on Tuesday, to 44.67 Philippine pesos from 44.64 pesos, and to SG$1.3238 from SG$1.3226. It slipped to 1,102.92 South Korean won from 1,103.17 won, and to 32.90 Thai baht from 32.93 baht, while buying 63.41 Indian rupees against 63.42 rupees. The Australian dollar bought 81.11 U.S. cents against 81.06 cents, while the Chinese yuan was at 19.32 yen against 19.30 yen.