The dollar jumped against a basket of currencies after revised data released today showed the US economy grew much more than previously estimated in the second quarter.
The US commerce department said annual GDP rose 3.7 per cent between April and June, up from 2.3 per cent initially reported. It was buoyed by strong domestic demand, which makes up more than two thirds of the US economy, and grew at a rate of 3.1 per cent.
This figure also beat economists' expectations for revised growth of 3.2 per cent, according to a poll by Reuters.
The Fed must now weigh better-than-expected growth with a slowing Chinese economy which plunged global markets into turmoil this week. The shakier international backdrop may have pushed central bankers away from hiking rates in September, as is widely anticipated. Yesterday US Federal Reserve rate-setter Bill Dudley said that it could be "too soon".
Attention now turns to the annual central banking knees-up currently taking place in a mountain getaway. It's hoped speakers at the Jackson Hole conference, including the likes of Bank of England governor Mark Carney, will shed some light on what central bankers make of the recent market turbulence.
Read more: What is the Jackson Hole summit all about?