(fxcue news) - The U.S. dollar climbed to a two-year high on Thursday on upbeat economic data and the Federal Reserve's signal that rate cuts next year will be fewer than previously expected. The dollar index surged to 108.49 in the New York session, gaining more than 0.4%, after exhibiting weakness in the European session. The Fed cut the key lending rate by 25 basis points as expected but revised its projections to signal just two interest rate cuts next year compared to the four previously forecast, citing stubbornly high inflation. The hawkish Fed outlook lifted the yield on benchmark U.S. Treasury yields to a seven-month high and the dollar to a two-year peak. Fed Chair Jerome Powell's repeated references to the need for caution from here underscored investor concerns that Trump's fiscal, trade and tariff policies may fuel inflation and keep U.S. interest rates higher for longer. The Commerce Department released a report this morning showing the pace of U.S. economic growth unexpectedly surged by more than previously estimated in the third quarter. The report said gross domestic product shot up by 3.1% in the third quarter, reflecting an upward revision from the 2.8% jump previously reported. Economists had expected the pace of growth to be unrevised. A separate report released by the Labor Department showed first-time claims for U.S. unemployment benefits pulled back by more than expected in the week ended December 14th, falling to 220,000, a decrease of 22,000 from the previous week's unrevised level of 242,000. Economists had expected jobless claims to dip to 230,000. Against its major counterparts, the greenback turned in a mixed performance. Against the Euro, the dollar pared earlier losses and was just marginally down at 1.0366. Against Pound Sterling, the dollar strengthened to 1.2501. The dollar moved up sharply against the Japanese currency, fetching 157.43 yen a unit, nearly 1.7% more than previous closing value of 154.84 yen. Against the Aussie, the dollar was down at 0.6238. The Swiss franc gained against the greenback, firming to 8.8989 a unit of the U.S. currency, from 0.9011. Against the Loonie, the dollar was down at 1.4401.