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FOREX-Dollar rises after strong U.S. GDP report; euro sags
August 28, 2014 / 2:20 PM / 3 years ago

FOREX-Dollar rises after strong U.S. GDP report; euro sags

* U.S. Q2 GDP revised up to 4.2 percent

* Escalation of Ukraine tensions pushes up yen, Swiss franc

* Euro hits 21-month low against Swiss franc (Adds dollar gains, quotes, U.S. data; changes byline and dateline, previous LONDON)

By Michael Connor

NEW YORK, Aug 28 (Reuters) - The dollar got a lift from better-than-expected U.S. growth data on Thursday as the euro fell amid reawakened investors’ worries about a serious escalation in tensions between Ukraine and Russia.

The dollar index jumped just after the U.S. government reported the American economy grew at an upwardly revised 4.2 percent during the second quarter and was last up 0.15 percent at 82.553.

The basket of six major currencies valued against the dollar has this week repeatedly set new 2014 highs amid a greenback rally that began in early July.

“The basic story is still in place of a solid rebound (in the economy) in the second quarter after a depressed first quarter,” said Doug Handler, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. “These numbers will not change the Fed’s outlook.”

The Commerce Department had initially estimated that U.S. gross domestic product expanded at a 4.0 percent annual rate in April, May and June. The 4.2 percent rate reflected upward revisions to business spending and exports and was the fastest pace since the third quarter of 2013.

A separate, Labor Department report showed the number of Americans filing new applications for jobless benefits slipped 1,000 to a seasonally adjusted 298,000 last week. It marked a second week of consecutive declines and underscored brightening labor market fundamentals.

Safe-haven currencies, the yen and the Swiss franc , rose in global currency markets. The dollar was last down about 0.2 percent against both currencies.

The euro hit a 21-month low against the Swiss franc of 1.2052 francs per euro on trading platform EBS after news from Ukraine and was last off 0.12 percent at 1.2054 francs.

Against the yen, the single currency fell to a two-week low of 136.41 yen per euro and was last at 136.51, down for the day by 0.4 percent. The euro was trading at $1.3169, down about 0.2 percent.

Selling of the euro, which traded at nearly $1.40 in May, has been driven over the last week by stepped-up speculation that European policymakers will quicken monetary loosening as a way to boost economic growth.

But on Thursday euro selling accelerated after Ukraine accused Russia of moving troops across its border. Ukrainian President Petro Poroshenko convened his security and defense council to decide how to respond.

“If the situation deteriorates ... the obvious loser is the euro,” said Adam Cole, global head of currency strategy at RBC Capital Markets. Germany, the euro zone’s largest economy, is one of Russia’s biggest trading partners. (Reporting By Michael Connor in New York; Editing by Jonathan Oatis)

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