The euro dipped on Friday after a survey showed German business morale fell for the sixth month in a row, while the Australian dollar rebounded after China denied it had banned imports of the country's coal. Weak data since January has undermined support for the euro, which edged lower but remained in positive territory against the dollar at $1.1351. It hit a two-week high of $1.1371 on Wednesday, helped by hopes for an easing of the US-China trade conflict.
Analysts assessing the euro's prospects are focused on whether a slowdown in European growth is likely to be protracted. A survey on Friday showed business morale fell in February for a sixth straight month in Germany, the mainspring of the European economy. "In the end, it is mainly the prospect of the stuttering growth driver Germany that is contributing to the uncertainty regarding the EUR outlook," said Esther Reichelt, an FX strategist at Commerzbank in Frankfurt.
Traders will scrutinise comments by European Central Bank President Mario Draghi later on Friday, especially if he elaborates on plans for further monetary policy easing. The Australian dollar rebounded after tumbling more than 1 percent on Thursday, when Reuters reported the Chinese port of Dalian had banned imports of Australian coal indefinitely. China said on Friday imports would continue, but customs has stepped up checks on foreign cargoes.
That saw the Aussie rise to the day's high of $0.7117, up 0.3 percent on the day. The dollar traded flat against a basket of major currencies. Thursday's US economic data showed an unexpected decline in core capital goods orders, bolstering expectations the Federal Reserve will keep interest rates steady.
Investors continue to watch high-level talks between US and Chinese trade negotiators in Washington. Just over a week is left before a US-imposed deadline for an agreement expires, triggering higher tariffs. With the economic outlook foggy and major central banks much more accommodative compared with a few months ago, US-China trade talks and Brexit are the primary concerns for traders.
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