* Month-end demand, upbeat data drive USD to four-week highs
* U.S. economic growth accelerates in Q2, Japan data also strong
* Syria uncertainty still persists, but less of a worry for now
By Ian Chua
SYDNEY, Aug 30 (Reuters) - The dollar greeted the Asian session on Friday at its highest in nearly four weeks against a basket of major currencies, having posted a strong rally thanks to month-end demand and upbeat U.S. economic data.
Figures from Japan also surprised with manufacturing showing a marked pick up on domestic demand while inflation accelerated, all signs that Abenomics might be working to end deflation in the world’s third-biggest economy.
Oddly, if the Nikkei bounces on the data the yen could actually lose ground as the two have been locked in an inverse relationship for months now.
Jitters about Syria were temporarily put aside after the British parliament rejected a motion supporting military action, a setback to Western governments looking to punish President Bashar al-Assad for what they believe was his use of chemical weapons against civilians.
The greenback gained broadly following an upward revision to second-quarter U.S. economic growth, which bolstered the case for the Federal Reserve to begin winding down stimulus next month.
The dollar index traded at 81.990, having climbed 0.7 percent on Thursday, its biggest one-day rally in about a month.
It rose to 98.37 yen from Thursday’s low of 97.45 to be back near the mid-point of this month’s 95.81/99.96 range.
The greenback’s rally was further fuelled by stop-loss selling in the euro that took the common currency to a two-week low of $1.3219, a big turnaround from this week’s high near $1.3400.
The euro was struggling at $1.3238, with the Aug. 15 trough around $1.3205 providing initial support. A break there will pave the way for a retest of the Aug. 2 low of $1.3188.
“But with the U.S. holiday looming on Monday, and with the U.S. and UK seeming to accept that they should wait for the UN’s report on what happened in Syria, due on Saturday, as well as the month end, it’s hard to see the participants getting overly involved,” CitiFX said in a client note.
U.S. financial markets will be shut on Monday for the Labor Day holiday.
Emerging market currencies were off their lows as authorities in the worst-hit centres were forced into action to defend them.
This week alone, India, Indonesia and Brazil acted to stem an outflow of funds from their markets, which have fallen on hard times as investors moved to position for a world with less easy money from major central banks.
On Thursday, Indonesia’s central bank raised its main interest rates for a third time in four months after the rupiah currency slumped to a 4-1/2 year low earlier this week.