By Michael Kitchen, MarketWatch
LOS ANGELES (MarketWatch) — The euro extended gains during East Asian trading hours Friday, receiving further support from hopes the European Central Bank (ECB) would act soon to help keep the euro zone intact.
The euro EURUSD +0.04% rose to $1.2289, up from $1.2284 late Thursday in North America, though off its Thursday high of $1.2329.
The European currency had rallied sharply after ECB President Mario Draghi promised “to do whatever it takes to preserve the euro.” Read more on Thursday’s currency trade.
But despite the market optimism, some analysts remained skeptical of any major impending action from the ECB.
“We are unlikely to see any material change in ECB policy beyond a final cut to the [benchmark] refi rate (which we think will happen in September),” wrote Royal Bank of Canada fixed-income and currency strategist Michael Turner.
He said the euro’s “brutal rally” Thursday implied expectations that the region’s key bailout fund — the European Stability Mechanism — would be “getting the keys to Leverage City.”
“If there are comments that seek to play this down today or over the weekend, [euro] looks a little vulnerable,” Turner said.
As the euro rose, the U.S. dollar headed in the other direction, with the ICE dollar index DXY -0.06% falling to 82.787 from late Thursday’s 82.834.
Likewise, the WSJ dollar index XX:BUXX +0.00% , a recently launched benchmark tracking the greenback against the most heavily traded global currencies, slipped to 71.82 from 71.85.
The dollar’s easing came ahead of U.S. gross domestic product data due later Friday, expected to show a cooling in economic growth during the second quarter. Read U.S. GDP preview.
Other major currencies moved higher, with the British pound GBPUSD +0.00% edging up to $1.5680 from $1.5685 late Thursday, and the Australian dollar AUDUSD +0.24% rising to $1.0417 from $1.0396.
The Japanese yen also gained ground, with the dollar USDJPY +0.11% falling to ÂĄ78.20 from ÂĄ78.29.
Michael Kitchen is Asia editor for MarketWatch and is based in Los Angeles.
