NEW YORK: The dollar hit a two-week peak, and was on track for its largest daily gain against the euro in more than four months after strong US data emboldened the view that the Federal Reserve could next month begin winding down its stimulus program.

Investors bought the greenback after data showed the US economy accelerated sharply in the second quarter thanks to a surge in exports. US GDP grew at a 2.5 percent annual rate in the April-June period, more than double the pace clocked in the prior three months.

“This is a good report for those who expect the Fed to taper in September,” said Vassili Serebriakov, currency strategist at BNP Paribas in New York.

“One of the key concerns that the Fed has voiced recently has been the dichotomy between firm employment and soft GDP growth. This should ease some of those concerns,” he said.

Still, Serebriakov doubted that the reports would sway the minds of some market participants who believe the Fed will not begin to scale back its stimulus until later.

The dollar was last 0.7 percent higher against a basket of currencies at 82.018, after earlier hitting 82.067, its highest since Aug. 5. Against the safe-haven Japanese yen, the greenback traded up 0.7 percent at 98.34 yen.

Hedge funds and other speculative players in the foreign exchange market have grown defensive on the dollar over the past month, but that bearish trend could be a risky bet with the dollar’s downside looking increasingly limited.

The euro, meanwhile, plunged 0.8 percent against the dollar to $1.3234, on pace for its worst daily performance since mid-April. It earlier touched a low of $1.3218, a two-week trough.

Market sentiment was still cautious, but prospects of an imminent Western intervention looked set to be delayed until UN investigators report back.