- Data fails to boost expectations of Dec. Fed rate hike
- Dollar slips vs yen after hitting 3-month high
- Euro gains vs dollar, still down 2.7 pct for month
(Updates prices, adds comments; changes byline, dateline, pvs LONDON)
The U.S. dollar slipped from a three-month high against the yen and fell against the euro on Friday after federal government data showing a deceleration in U.S. consumer spending in the third quarter overshadowed a stronger-than-expected overall economic growth reading.
Gross domestic product increased at a 2.9 percent annual rate, accelerating from a 1.4 percent pace in the second quarter, the Commerce Department said in its first estimate. That was the strongest growth rate since the third quarter of 2014.
Consumer spending, however, increased at a 2.1 percent rate, slowing from the second quarter's robust 4.3 percent pace. Consumer spending accounts for more than two-thirds of U.S. economic activity.
Analysts said the reading could be viewed as tepid given the consumer spending component and therefore did not further reinforce traders' confidence that the Federal Reserve would raise interest rates in December.
"What I think the Fed watches is not the GDP number per se, but final domestic demand, and that is the GDP number minus inventories and minus exports, and in that case the U.S. economy actually slowed down from Q2," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.
Analysts said the dollar was struggling to gain further since expectations that the Fed will raise interest rates in December have already largely been expressed in the greenback's rally this month.
"It is hard to find a reason for the dollar to appreciate at such elevated levels," said Dean Popplewell, chief currency strategist at Oanda in Toronto.
Traders last saw a more than 78 percent chance the Fed would hike rates in December, up only slightly from Thursday's probability, according to CME Group's FedWatch tool.
The euro was last up 0.35 percent against the dollar at $1.0932. The euro has fallen about 2.7 percent this month against the dollar on the growing expectations of a December Fed rate hike, which have been stoked by hawkish comments from Fed officials.
The dollar was last down 0.09 percent against the yen at 105.18 JPY= yen. It touched a session low of 105.06 yen after briefly hitting a three-month high of 105.50 yen shortly after the U.S. GDP data.
The dollar index .DXY , which measures the greenback against a basket of six major currencies, was last down 0.18 percent at 98.706.
