U.S. dollar rallies on upbeat economic data

The U.S. dollar extended its gains Friday as optimistic U.S. economic data strengthened market speculations that the Federal Reserve may raise interest rates earlier than expected.

The dollar index, which tracks the greenback against a basket of major currencies, was up 0.4 percent to a four-year high of 85. 521 in late trading.

The greenback advanced to its 11th consecutive weekly gain on positive signs that the U.S. economy is gaining momentum. The U.S. Commerce Department on Friday raised its estimate for the growth of gross domestic product in the second quarter to 4.6 percent, much higher than a contraction of 2.1 percent in the first quarter.

Meanwhile, the final reading of the consumer sentiment index in September edged up to 84.6 from 82.5 in August, the Thomson Reuters/University of Michigan said Friday. The figure, the highest in fifteen months, is largely in line with economists' expectation of 84.7.

The dollar was also supported by the policy divergence between the Fed and the European Central Bank (ECB). The positive U.S. economic data has well lifted the market expectations that the Fed may raise interest rate before the mid-2015, while the ECB policymakers pledged to take more stimulus measures amid weak economic data coming out of the eurozone.

Earlier this week, financial data firm Markit Economics reported that the composite purchasing managers'index (PMI) in eurozone fell to a 9-month low of 52.3 in September, signaling the further waning of the bloc's economic growth. A reading below 50 indicates contraction.

ECB President Mario Draghi said Wednesday that interest rates in the eurozone will remain at the present low level for an extended period, and the central bank would expand monetary easing measures if required.

In late New York trading, the euro slipped to 1.2683 dollars from 1.2747 dollars in the previous session, and the British pound fell to 1.6251 dollars from 1.6310 dollars. The Australian dollar decreased to 0.8761 dollar from 0.8785 dollar.

The dollar bought 109.36 Japanese yen, higher than 108.69 yen of the previous session. The dollar went up to 0.9514 Swiss francs from 0.9469 Swiss francs, and it moved up to 1.1156 Canadian dollars from 1.1099 Canadian dollars.