Reply #22: Dollar jumps after 4th-qtr US GDP tops views

[Ghost Dog]

http://yahoo.reuters.com/news/articlehybrid.aspx?type=comktNews&storyID=2007-01-31T141232Z_01_N31456602_RTRIDST_0_MARKETS-FOREX-UPDATE-7.XML

NEW YORK, Jan 31 (Reuters) - The dollar jumped on Wednesday after data showing U.S. economic growth in the fourth quarter was higher than expected, suggesting the Federal Reserve may now be more sensitive to any sign of inflation.

The dollar had been little changed against the euro and lower against the yen before the Commerce Department reported that U.S. gross domestic product grew at an annualized pace of 3.5 percent in the final three months of 2006, above forecasts for 3.0 percent.

"The GDP report showed a surprising uptick in economic growth - that's good news," said Mark Meadows, currency strategist with Tempus Consulting in Washington.

"We are seeing the dollar react favorably to the numbers because stronger growth usually comes with stronger inflation and in that sense, I wouldn't be surprised to see the Fed turning a bit more hawkish later today."

Following the report, the euro <EUR=> fell against the dollar, trading at $1.2930 soon after the report from about $1.2960 where it was shortly prior to the GDP report. The dollar gained against the yen, trading at about 121.70 yen <JPY=> from about 121.40 yen.

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