Dollar rose in American trade on Friday, resuming gains and approaching six-week highs, on active demand following strong US growth data. 

US GDP growth beat expectations in the fourth quarter of last year, hurting the odds of early US interest rate cuts in March.

The Index

The dollar index rose 0.2% to 103.44, with a session-low at 103.12, after closing down 0.25% yesterday, away from a six-week high at 103.82. 

US GDP

US GDP growth clocked in at 3.3% in the fourth quarter of 2023, easily beating estimates of 2.0%, and after surging 4.9% in the third quarter. 

Such data proves the resilience of the US economy despite high interest rates, in turn hurting the odds of early Federal Reserve rate cuts next March.

US Rates

Following the growth data, the odds for a US interest rate cut at the Fed March meeting slid from 44% to 40%, while the odds for such a cut in May fell to 80%.

Gold prices rose in European trade on Thursday away from week lows as the dollar lost ground against major rivals.

The gains remain limited as traders await important US growth in the fourth quarter, which will provide fresh pricing for 2024 Fed interest rate cuts. 

The odds of the first Fed rate cut in March tumbled recently following strong US data and bullish remarks by some Fed officials.

Gold Prices Today 

Gold prices rose 0.2% to $2,018 an ounce, with a session-low at $2,013, after losing 0.75% on Wednesday, marking a one-week trough at $2,011 following strong US data.

The Dollar

The dollar index slipped 0.1% on Thursday against a basket of major rivals, underpinning greenback-denominated commodities. 

Dollar's slip came as US 10-year treasury yields took a backseat as well as investors await fresh clues on the future of interest rates.

US Rates

There's now a 44% chance of a 0.25% Fed interest rate cut at the March meeting, and a 84% chance for such a cut in May. 

The March odd is sharply down from 80% in recent weeks following a spate of upbeat US data and bullish remarks from Fed officials.

US Growth Data

Later today, investors await a stream of US data, chief of which GDP growth data for the fourth quarter, estimated at 2.0%. 

The SPDR

Gold holdings at the SPDR Gold Trust remained flat yesterday at 858.93 tonnes, the lowest since October 18. 

Euro rose in European trade on Thursday against a basket of major rivals, maintaining gains for the second straight session against the dollar, moving off six-week lows ahead of the European Central Bank's policy decisions. 

The ECB is expected to hold interest rates unchanged at 2001 highs, but might provide clues on he future path of interest rates.

EUR/USD

EUR/USD rose 0.1% to 1.0891, with a session-low at 1.0870, after rising 0.3% on Wednesday, the first profit in three days away from a six-week trough at 1.0822. 

The ECB

Markets await the European Central Bank's meeting later today, after recent data showed inflation accelerated in December.

Markets expect the ECB to hold rates steady at 4.5%, already a 23-year peak, for the third meeting in a row. 

The ECB said after the December meeting that despite a recent tumble in inflation, prices are expected to pick up again soon.

The ECB believe that current policies and interest rates will help achieve the 2% inflation target. 

European Remarks 

Several ECB officials opposed the idea of early interest rate cuts starting next May as inflation and wages continue to present risks.

ECB President Christine Lagarde said at the Davos Economic Forum that euro zone interest rates could be cut in the summer and not spring.

Dr Joachim Nagel, President of the Deutsche Bundesbank, Member of the Governing Council of the European Central Bank, said it's still too early to talk about rate cuts as inflation remains too high.

Robert Holzmann, Governor of Austria's Central Bank, said that Middle East geopolitical tensions and shipping disruptions in the Red Sea constitute a big inflation threat.

The Canadian dollar slipped against most major rivals on Wednesday following an expected decision by Bank of Canada.

The BOC held interest rates flat today amid efforts to control high inflation, as forecast by analysts, at 5%.

On trading, CAD/USD slipped 0.5% to 0.7395 as of 20:25 GMT. 

Aussie

Australian dollar stabilized at 0.658 against its US counterpart as of 20:25 GMT.

US Dollar

The dollar index fell 0.4% as of 20:03 GMT to 103.2, with a session-high at 103.5, and a low at 102.7. 

Later today, initial US data on GDP growth and consumer spending will be released, crucial in gauging the likely path ahead for US policies.

Investors are also focusing on corporate quarterly results, and inflation-related data as investors expect the US economy to land softly this year, with the Federal Reserve preparing to cut interest rates.

Earlier data showed the combined S&P Global PMI index at 52.3 in January for the US, up from 50.9 in the previous reading, the fastest such increase since June.

The US services PMI rose to 52.9 this month, beating estimates and scaling a seven-month high. 

Finally, the manufacturing PMI rose to 50.3 in January from 47.9.