NEW YORK -- The dollar gained against the yen and a basket of currencies on Wednesday after U.S. economic data reinforced expectations that the Federal Reserve will signal the end of its interest rate-cutting campaign later in the session.
A surprise rise in private-sector jobs this month along with data showing the U.S. economy grew at a higher-than-expected pace initially fueled further dollar buying. But some of the dollar's gains came off as details on U.S. gross domestic product were not as positive as the headline number suggested.
Overall, the data bolstered the view that U.S. interest rates may be nearing a bottom.
"On the surface, the ADP (jobs) and GDP numbers are better than expected. But I wouldn't read too much into them. I think both reports are overstating the health of the U.S. economy at this point," said Michael Malpede, senior currency strategist at MAN Global Research in Chicago.
"The data may give the Fed a bit more cover if it wants to pause today, but that's about all," Malpede said. "As for currencies, the main event risk of the day is still the Fed decision, so people are waiting for that."
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The Fed is expected to announce its rate decision at 2:15 p.m. (1615 GMT).
In early New York trading, the euro was flat at $1.5557, recovering from near one-month lows at $1.5518. Against the yen, the dollar rose 0.5 percent to 104.57.
The dollar rose 0.1 percent against a basket of currencies to 72.945.
The Fed is widely expected to cut the benchmark federal funds rate to 2 percent. Many think the U.S. central bank may also signal a pause in its eight-month aggressive rate-cutting campaign, thus ending erosion of the dollar's yield.
Such expectations, coupled with signs that the euro zone may not be able to avoid the global slowdown, have put the dollar on track for its first monthly gain against the euro since October and its biggest percentage rise in 11 months.
Wedensday's data showed that the U.S. economy grew 0.6 percent in the first quarter, higher than market expectations for a 0.2 percent rise.
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