The dollar was mixed on Friday with month-end selling after a recent rally, as traders saw little in weak first-quarter US gross domestic product data to discourage bets the Federal Reserve will start raising interest rates in 2015. The dollar index traded tightly and was last off 0.10 percent but remained on track for a rise for May. That would extend a string begun last July of nearly uninterrupted monthly gains for the index of six major currencies traded against the greenback.
"Underlying sentiment remains positive but the dollar is seeing some profit taking and month-end, book-balancing catch-up after its recent advance," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. The US government reported that the American economy contracted during January, February and March because of heavy snowfalls, a resurgent dollar and disruptions at West Coast ports. The government slashed its gross domestic product estimate to show GDP shrinking at a 0.7 percent annual rate instead of the 0.2 percent growth pace it estimated last month.
-- Investors look past weak US GDP data
-- Dollar index on track for monthly gain
-- Euro ahead on Greece hopes
Economists point to bad weather and other unusual circumstances in early 2015 and caution against reading too much into the slump, which could oblige Fed policymakers to delay ending an era of near-zero US rates. More recent data, particularly upbeat home sales, reinforced the view the economy was recovering from the weather-related problems and the Fed was still on track to raise rates.
"The GDP data was largely in line, slightly better than what the market expected," said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie Ltd in New York. The dollar was off 0.40 percent at $1.0989 against the euro, which was benefiting from hopes a deal may soon be reached between Greece and its creditors, according to Wizman.
A spokesman for Greece's government said it intends to reach an agreement with lenders on a cash-for-reforms deal by Sunday, after euro zone officials suggested a deal was far from imminent. Traders cited a warning from Japanese Finance Minister Taro Aso as a factor behind the dollar's move away from Thursday's high of 124.46 yen. That was a 12-1/2 year peak for the dollar which was last trading up 0.10 percent at 124. The dollar rose 0.05 percent against the Canadian dollar, which was stung by data showing the country's economy shrank in the first quarter.