Euro shrugs off disappointing GDP data, dollar subdued

Written by Reuters | Sydney | Updated: Aug 15 2014, 12:33pm hrs
The euro steadied early on Friday, brushing aside soft euro zone inflation and disappointing growth data that kept alive prospects of more stimulus from the European Central Bank.

The common currency was little changed at $1.3363, having recovered from a brief dip to $1.3348. Still, it remained near a nine-month trough of $1.3333 and was on track to end lower on the week.

It was choppy against the yen, drifting to a 1-1/2 week high of 137.25 before slipping back under 137.00 for a nearly flat finish in New York. It was last at 136.93.

"The issue is, and this is hard to measure quantifiably, that traders were expecting the weakness," said Christopher Vecchio, currency analyst at DailyFX, of the euro zone GDP data. Therefore, euro bears were left wanting more, he added.

Data on Thursday showed growth in the euro zone stalled in the second quarter, with Germany suffering a surprise contraction.

At the same time, inflation in the region was confirmed to have slowed to levels not seen since the height of the financial crisis nearly five years ago, leaving deflation a very real threat.

With the euro reluctant to move lower for now, the dollar index struggled to make much headway.

Traders said the market also tried to mark down the greenback after a report showed the number of Americans filing new claims for unemployment benefits rose more than expected last week.

It was last at 81.617 after ending nearly flat in New York. However, the index was still within striking distance of an 11-month peak of 81.716 set last Wednesday.

Dollar bulls have been looking for fresh reasons to drive up the index after last month's 2.1 percent rally - the biggest monthly gain in over a year.

They are likely to have to wait a little longer given an absence of major economic data in Asia and with many European centres closed for the Assumption Day holiday on Friday.