By William L. Watts and Michael Kitchen, MarketWatch
FRANKFURT (MarketWatch) — The euro advanced against most major rivals on Friday as traders weighed scope for action by the European Central Bank after its chief pledged a day earlier to preserve the euro.
The euro EURUSD +0.2766% rose to $1.2315, 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.
The Bundesbank on Friday said it remained opposed to any further bond purchases by the ECB, but would be fine with purchases by the euro zone’s rescue funds, Dow Jones Newswires reported.
“If the better sentiment on the single currency is going to have any chance of being maintained then two things need to happen. First, Draghi is going to have to follow through on his words of yesterday. Secondly, the ECB is going to have to do so in a way that offers reassurance to the private sector that debt holders will not be the ones shouldering the burden,” said Simon Smith, chief economist at FxPro in London.
French daily Le Monde, meanwhile, reported that the ECB and euro-zone governments were working on a plan that would see the rescue fund buy Spanish and Italian government bonds in the primary market, while the ECB would resume secondary-market purchases.
As the euro rose, the U.S. dollar headed in the other direction, with the ICE dollar index DXY -0.22% falling to 82.730 from late Thursday’s 82.834.
Likewise, the WSJ dollar index XX:BUXX -0.23% , a benchmark tracking the greenback against the most heavily traded global currencies, slipped to 71.67 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 +0.3050% rising to $1.5730 from $1.5685 late Thursday, and the Australian dollar AUDUSD +0.3790% rising to $1.0436 from $1.0396.
The Japanese yen also gained ground, with the dollar USDJPY -0.0743% falling to ÂĄ78.20 from ÂĄ78.29.
William L. Watts is MarketWatch's European bureau chief, based in Frankfurt.
Michael Kitchen is Asia editor for MarketWatch and is based in Los Angeles.
