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27 May 2024

Euro firms vs dollar as US growth falls short


The euro gained ground against the dollar Friday as US economic growth numbers disappointed and hopes remained alive that a Greek debt deal with private creditors is looming.

The euro fetched $1.3221 (Dh4.85) around 2200 GMT, firming from $1.3104 at the same time late Thursday.

Earlier the European currency dipped briefly after the US government reported the economy had grown at an annual 2.8 percent clip in the fourth quarter last year.

That marked a pick-up from the third quarter's 1.8 percent pace but was well below the 3.2 percent rate expected by most analysts.

The details also disappointed investors, with vital American consumer spending increasing less than forecast, raising questions about the strength of the world's biggest economy.

Later the euro clawed back, hitting $1.3234, its highest level since mid-December.

The euro also found support because the "Italian and Spanish bond markets are also performing reasonably well today," said Nick Bennenbroek, head of currency strategy at Wells Fargo Bank.

Private creditors holding talks with Greece on a major debt writedown to avert a sovereign default said "important understandings" were reached and the negotiations would continue Saturday.

European economic commissioner Olli Rehn said he expected Greece to agree a deal very soon.

"We're very close," he told the World Economic Forum in Davos, Switzerland. "They're about to close a deal, if not today maybe over the weekend, preferably in January rather than February."

The market appeared to shrug off Fitch downgrades of Italy, Spain and three other eurozone countries.

"There was absolutely no" impact, said Charles St-Arnaud, at Nomura. The announcement was "generally expected" after Fitch warned a month ago it was reviewing them for possible credit cuts.

The dollar, meanwhile, fell against other major currencies, including the yen, to 76.67 yen compared with 77.43 yen late Thursday.

The greenback dropped to 0.9111 Swiss francs from 0.9205 francs. The British pound also strengthened against the dollar, to $1.5726 from $1.5688.