Data Bolsters Dollar

(RTTNews) - The U.S. dollar ended up higher against major currencies during the week ended September 26 amidst stronger-than-expected updates on the U.S. economy that softened rate cut expectations from the Fed.

Data releases during the week inter alia showed the strongest GDP data since the third quarter of 2023, the lowest weekly figure of initial jobless claims in two months, and the Fed's preferred PCE inflation readings in line with expectations. However, concerns over a possible U.S. government shutdown limited the greenback's gains.

With data from the U.S. portending economic resilience and potentially jeopardizing the Fed's plans to ease rates, the U.S. dollar rallied against the euro, the British pound, the Australian dollar, the Japanese yen, the Canadian dollar, as well as the Swiss franc. It however edged down against the Swedish krona.

The Dollar Index, a measure of the Dollar's strength against a basket of 6 currencies gained 0.52 percent during the week ended September 26. The index closed at 98.15, versus 97.64 a week earlier. Though the Index had touched a low of 97.20 on Tuesday, it climbed all the way to 98.61 on Thursday in the aftermath of the release of the strong GDP data.

Federal Reserve Chair Jerome Powell's comments on Tuesday that highlighted the challenging situation faced by central banks swayed currency market sentiment. Powell, on Tuesday said that further rate cuts by the Federal Reserve was not guaranteed given the challenging situation of rising inflation and cooling job market.

Data released on Thursday by the Bureau of Economic Analysis showed the U.S. economy expanding at an annualized 3.8 percent in the second quarter of 2025, versus 3.3 percent in the second estimate. The strongest performance since the third quarter of 2023 dampened hopes of immediate rate cuts by the Fed, lifting the Dollar.

Data released by the Census Bureau showed durable goods orders in the U.S. rising by 2.9 percent month-over-month in August versus a 2.7 percent slump in July. Markets had anticipated a fall of 0.5 percent.

Data released by the Department of Labor showed initial jobless claims in the U.S. sinking to 218 thousand in the third week of September, while markets expected it rebound to 235 thousand. The lowest figure in two months also contributed to markets toning down rate cut expectations from the Fed.

Data released on Friday showed that as expected, the year-on-year PCE price index edged up to 2.7 percent from 2.6 percent in July. Its core component remained steady at 2.9 percent, matching expectations. The month-on-month PCE price index edged up to 0.3 percent from 0.2 percent in July, aligning with forecasts. Its core component recorded 0.2 percent, matching what the markets had anticipated.

Amidst the dollar's rebound as well as geopolitical jitters, the EUR/USD pair ended the week on a negative note, closing at 1.1702 versus 1.1746 a week earlier. During the week, the pair ranged between the high of 1.1820 recorded on Tuesday and Wednesday and the low of 1.1646 touched on Thursday.

Amidst a resurgence in the U.S. Dollar and fiscal concerns worrying the sterling, the GBP/USD pair slipped 0.48 percent during the week ended September 26, dragging down the sterling to $1.3405, from $1.3470 a week earlier. During the week, the pair dropped from the high of 1.3538 touched on Tuesday to the low of 1.3323 recorded on Thursday. Flash PMI readings released during the week had shown a decline in manufacturing and services PMI readings.

The Australian Dollar dropped 0.73 percent against the U.S. Dollar during last week. The pair ranged between the high of 0.6629 recorded on Wednesday and the low of 0.6520 recorded on Friday but eventually closed at 0.6546. The pair was at 0.6594 a week earlier. The Aussie's moves came amidst a rebound in the Dollar as well as disappointing PMI readings.

The USD/JPY pair rallied 1.04 percent during the past week. The pair jumped to 149.51, from 147.97 a week earlier. The week's trading ranged between the low of 147.45 recorded on Tuesday and the high of 149.96 recorded on Friday. The yen dropped in the past week in reaction to the Dollar's rally fueled by hawkish comments from Fed Chair Jerome Powell, strong economic data from the U.S. as well as disappointing PMI readings from Japan.

At the onset of the current week and amidst a looming U.S. govt partial shutdown, the Dollar Index has declined to 97.97. Key economic data from the U.S. including JOLTs job openings data, PMI data, as well as the monthly non-farm payrolls report are scheduled for release during the week.

The EUR/USD pair has increased to 1.1727 whereas the GBP/USD pair has increased to 1.3443. Ahead of Reserve Bank of Australia's interest rate decision, the AUD/USD pair has also rallied to 0.6563. The USD/JPY pair has decreased to 148.70.