Six Weeks High Of Dollar Rate

The dollar traded near its highest in six weeks versus the yen on speculation a government report today will show U.S. gross domestic product growth accelerated in the first quarter, according to Bloomberg.
U.S. GDP expanded 5 percent at an annual rate in the first quarter, today's report will show at 1:30 p.m. London time, according to the median of 74 forecasts in a Bloomberg survey. This would leave average growth for the past three quarters at the quickest in 20 years. Faster growth may boost speculation the Federal Reserve will raise its target rate by September.
``If we get a strong growth number today and expectations of a rate rise in August increase, the dollar may gain to $1.15 in the next few months,'' said Francesca Fornasari, a currency strategist in London at Morgan Stanley. The Fed's benchmark rate has stayed at 1 percent, the lowest since 1958, since June.
Against the euro, the dollar was at $1.1830 at 9:07 a.m. in London from $1.1841 late yesterday in New York, according to EBS, an electronic foreign-exchange dealing system. It gained to 110.58 yen from 110.10, the highest since March 15. Trading in the daily $1.2 trillion currency market may be less than usual because of a holiday in Japan.
Today's GDP report will also include a measure of inflation that's expected to rise to 2 percent from 1.5 percent in the fourth quarter. The Fed has cited ``muted'' price increases in keeping interest rates near a 46-year low. Higher rates may boost investment in dollar-denominated assets. The dollar is up against 14 of the 16 most-traded currencies tracked by Bloomberg.