Forex - Dollar rises to new 4-year highs after U.S. data

The dollar rose to new four-year highs against a basket of other major currencies on Friday, after data showed that the U.S. economy grew in line with expectations in the last quarter, adding to expectations for an early U.S. rate hike.

U.S. second quarter GDP was initially reported to have increased by 4.2%.The dollar strengthened further after the Commerce Department said U.S. gross domestic product expanded at an annual rate of 4.6% in the second quarter, in line with the consensus forecast, after contracting by 2.1% in the first three months of the year.

The positive data added to expectations for an early U.S. rate hike, after Dallas Federal Reserve President Richard Fisher said that the U.S. central bank may start raising interest rates around the spring of 2015.

Separately, the University of Michigan said in a revised report that its consumer sentiment index remained unchanged at 84.6 this month, compared to expectations for an uptick to 84.7.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, gained 0.48% to 85.75, not far from the day's high of 85.77, the highest level since July 2010.

USD/JPY gained 0.44%, hovering close to a six-year peak at 109.20.

Earlier Friday, data showed that Japan's consumer price inflation rose at an annualized rate of 3.3% this month, below expectations for a 3.4% increase.

Core consumer price inflation, which excludes fresh food, rose 3.1% in September from a year earlier, compared to expectations for an increase of 3.2%.

The euro was trading near two-year lows against the dollar, with EUR/USD last down 0.49% at 1.2686 after data earlier showed that the Gfk German consumer climate index ticked down to 8.3 this month, from a reading of 8.6 in August. Analysts had expected the index to slip to 8.5.

The report added to concerns over the outlook for growth in the euro zone's biggest economy as data on Wednesday showed that Germany's Ifo business confidence index deteriorated for the fifth successive month in September.

The single currency dropped to nearly two-year lows against the dollar on Thursday after European Central Bank President Mario Draghi reiterated the bank's commitment to act with more policy measures to boost inflation in the euro zone.

Elsewhere, GBP/USD declined 0.43% to 1.6247, while USD/CHF climbed 0.51% to fresh 14-month highs at 0.9515.

The Australian and New Zealand dollars were lower. AUD/USD remained near seven-month lows, down 0.20% at 0.8769, while NZD/USD dropped to a new one-year trough, retreating 0.69% to trade at 0.7876.

Meanwhile, USD/CAD rose to fresh six-month highs and was last up 0.39% to 1.1151.