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The euro climbed on Friday afternoon after US growth data fell in line with expectations.
Although the GDP data showed annual US growth fell to 1.5 per cent in the second quarter, down from 2 per cent previously, the headline number was in line with market expectations and came as something of a relief after a run of disappointing data.
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The euro climbed 0.7 per cent to $1.2372 against the dollar in afternoon trade, adding to gains in the previous session that were prompted by hopes the European Central Bank could intervene to buy government bonds and support the eurozone.
The Australian dollar rose 0.5 per cent to $1.0450, remaining near three-month highs against the US currency.
Currency analysts were forecasting that currency traders would shift their attention away from the euro and towards the dollar in the week ahead, as speculation grew that the Federal Reserve could announce a third round of monetary easing when it meets on August 1.
âMore evidence that the US economy cannot reach âescape velocityâ could intensify speculation for more accommodation from the Fed and help the euro-dollar consolidate some more ahead of next Wednesday,â said analysts at Citigroup.
The euro also held on to its gains against the yen following the comments from Mario Draghi, president of the ECB, on the possibility of intervention by the eurozone central bank. The single currency was flat against the Japanese currency at Y96.07 but remained close to its highest level in a week. Earlier in the week, Japanese finance minister Jun Azumi had warned that currency intervention remained a possibility, with the yen at 12-year highs against the euro. The yen has also been strengthening against the US dollar in recent weeks. It remained just above Y78 versus the dollar on Friday, close to its strongest level since the start of June.
âYen intervention risk is increasing,â said analysts at Morgan Stanley.
âDeflationary pressure building via falling import prices and weakening demand conditions suggest local monetary authorities will become increasingly yen-sensitive.â
