* Euro survives GDP test but outlook still poor
* Dollar hit by lacklustre jobless claims, supports euro
* Weak Japan data foster bearish views for yen
(Adds details, quotes)
By Ian Chua and Shinichi Saoshiro
SYDNEY/TOKYO, Aug 15 The euro steadied on
Friday, accepting soft euro zone inflation and disappointing
growth data as keeping alive prospects of more stimulus from the
European Central Bank.
Knocks taken by the dollar following the release of
lacklustre weekly jobless claims on Thursday also underpinned
the euro as the number of Americans filing new claims for
unemployment benefits last week rose more than expected.
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
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
The dollar traded little changed at 102.49 yen,
knocked down overnight from a nine-day high of 102.66 following
the release of the weaker-than-expected U.S. jobless claims
The greenback stood to gain about 0.4 percent against the
yen this week although U.S. Treasury yields remained at low
levels, with market watchers noting the emergence of bearish
factors for the yen.
"Recent indicators out of Japan have been weak, like the
unimpressive GDP, highlighting economic weakness in the second
quarter. Until now further Bank of Japan easing was not
considered a possibility but such views are starting to be
challenged," said Shinichiro Kadota, chief Japan FX strategist
at Barclays Bank in Tokyo.
With the euro reluctant to move lower for now, the dollar
index struggled to make much headway.
It was last at 81.612 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.
Sterling pared some its losses to trade at $1.6684 but
remained stuck within striking distance of the four-month low of
$1.6657 it hit on Thursday after the Bank of England
indicated that it is in no hurry to raise interest rates.
The pound has shed almost 3 percent since hitting a six-year
high of $1.7192 in mid-July when hopes were high for the BOE to
For near-term clues, market players kept an eye on whether
the two-year gilt yield, which hit a two-month low of
0.662 percent on Thursday and helped drag sterling down, would
Britain will publish the second read on second-quarter gross
domestic product at 0830 GMT. Economists polled by Reuters
expected no revision from the 0.8 percent quarter-on-quarter
expansion announced previously.
(Editing by Shri Navaratnam and Eric Meijer)