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Dollar creeps higher against euro

The dollar inched higher against the euro on Friday in cautious trade ahead of the weekend as traders digested mixed economic data and awaited an easing of eurozone monetary policy.

NEW YORK: The dollar inched higher against the euro on Friday in cautious trade ahead of the weekend as traders digested mixed economic data and awaited an easing of eurozone monetary policy.

The announcement Thursday of weak first-quarter economic growth in the eurozone -- at 0.2 per cent, only half of what was expected -- still hung over the foreign exchange market as further evidence the European Central Bank will move next month to a more accommodative stance.

The euro slipped to $1.3695 from $1.3711 Thursday, and was down 0.6 per cent from a week ago.

Kathy Lien of BK Asset Management noted that the euro extended its losses against the US dollar this week but, excluding its steep sell-off on Tuesday, the euro-dollar rate saw little change during the rest of the week.

After ECB chief Mario Draghi indicated that he is comfortable with the idea of easing in June, "weaker economic data validated the need for more stimulus and supportive comments from European policy makers indicate that his peers share his views," Lien said.

In the United States, a housing report came in much better than expected. Housing starts jumped 13.2 per cent in April, however that was driven by construction starts in the often-volatile multi-unit sector. 

"We have been looking for signs that the winter weather was the cause of the economic discontent and the sharp increase in home construction seems to argue that was the case," said Joel Naroff of Naroff Economic Advisors.

Traders were looking ahead to next Wednesday's release of the Federal Reserve's minutes of the April 29-30 meeting of the Federal Open Market Committee for clues about the direction of US monetary policy.

"Chair Janet Yellen remains reluctant to move away from the zero-interest rate policy," said David Song at Daily FX.

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