Forex - Dollar gains on advancing GDP data, ECB rate cut

The dollar moved largely higher against most major currencies on Thursday after the U.S. government reported the country's gross domestic product grew more than expected in the third quarter, though profit taking clipped the greenback's earlier gains.

A surprise European Central Bank decision to cut interest rates further bolstered the dollar's appeal.

In U.S. trading on Thursday, EUR/USD was down 0.68% at 1.3422.

The ECB trimmed its benchmark interest rate to a record-low 0.25% from 0.5% in an unexpected decision.

The bank also cut its marginal lending rate to 0.75% from 1% and left its deposit facility rate unchanged at zero. 

ECB President Mario Draghi said euro zone borrowing costs will remain at present or even lower levels until the economy improves, adding that the euro zone may experience "a prolonged period of low inflation."

Meanwhile in the U.S. official data showed that the U.S. economy grew at an annual rate of 2.8% in the three months to September, far surpassing expectations for a 2.0% reading. The U.S. economy grew by 2.5% in the preceding quarter.

The robust data rekindled expectations that the Federal Reserve could announce plans to scale back its USD85 billion-a-month stimulus program as its next monthly meeting in December.

Stimulus programs aim to drive recovery by depressing borrowing costs, weakening the dollar in the process, and talk of their dismantling strengthens the currency.

Separately, the Department of Labor said the number of individuals filing for initial jobless benefits in the U.S. last week fell by 9,000 to a seasonally adjusted 336,000, largely in line with analysts' forecasts for a claims to fall by 10,000.

The greenback was flat against the pound, with GBP/USD down 0.01% at 1.6079.

Across the Atlantic, the Bank of England's monetary policy committee voted to leave rates on hold at 0.5% and made no changes to its GBP375 billion quantitative easing stimulus package.

The announcement came after economic data earlier this week added to indications that the recovery in the U.K. is deepening

The dollar was down against the yen, with USD/JPY down 0.77% at 97.91, and up against the Swiss franc, with USD/CHF up 0.40% at 0.9158.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.31% at 1.0451, AUD/USD down 0.81% at 0.9449 and NZD/USD trading down 0.72% at 0.8318.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.39% at 80.89.

On Friday, the University of Michigan is to release the preliminary reading of its consumer sentiment index. The U.S. is to round up the week with the closely watched government data on nonfarm payrolls and the unemployment rate.