Investing.com - The dollar climbed to nearly four-week highs against a basket of other major currencies on Friday, as Thursday's strong U.S. data added to optimism over the strength of the economic recovery.
The dollar strengthened on signs the U.S. economic recovery is on track after the Commerce Department reported that U.S. gross domestic product grew at an annual rate of 3.5% in the three months to September, beating forecast for 3%.
A separate report showed that the number of Americans filing new claims for jobless benefits rose for a second week last week, but underlying trends still pointed to a recovery in the labor market.
The yen plummeted to seven-year lows against the dollar, with USD/JPY up 2.20% at 111.64 after the Bank of Japan surprised markets by unexpectedly introducing further easing measures.
The yen came under broad selling pressure after the BOJ said it would raise its monetary base target to an annual increase of ¥80 trillion from ¥60-70 trillion yen in order to increase the chances of approaching its inflation goal.
Earlier Friday, official data showed that household spending in Japan rose 1.5% in September, disappointing expectations for an increase of 1.9%, after a 0.3% slip the previous month.
Year-on-year, household spending fell 5.6% last month, more than the expected 4.3% decline, after a 4.7% drop in August.
EUR/USD dropped to 1.2541, the lowest level since October 6 and was last down 0.27%.
Official data showed that euro zone consumer price inflation rose at an annualized rate of 0.4% this month, in line with expectations, up from 0.3% in September.
Core CPI, which excludes food, energy, alcohol, and tobacco, rose at an annualized rate of 0.7% in October, down from 0.8% from the previous month and compared to expectations for a reading of 0.8%.
A separate report showed that the euro zone's unemployment rate remained unchanged at 11.5% last month, as markets had anticipated.
Earlier Friday, official data showed that German retail sales dropped 3.2% last month, compared to expectations for a 1.0% fall. August's figure was revised to a 1.5% increase from a previously estimated 2.5% rise.
The pound was steady against the dollar, with GBP/USD trading at 1.5996 and the Swiss franc slipped lower, with USD/CHF gaining 0.31% to 0.9590.
Elsewhere, the commodity linked dollars were steady to lower, with AUD/USD slipping 0.15% to 0.8819 and NZD/USD inching up 0.03% to 0.7848, while USD/CAD added 0.11% to 1.1120.
The U.S. dollar index, which tracks the performance of the greenback against a basket of six major currencies, climbed 0.48% to 86.66, the highest level since October 6.
Later in the day, the U.S. was to release data on personal income and expenditure as well as revised data on consumer sentiment and a report on business activity in the Chicago region.