The dollar erased gains to trade flat against the euro on Friday after a report showing the U.S. economy expanded broadly in line with economists consensus expectations in the fourth quarter but a bit less than a Fed official had hinted.
Fourth-quarter U.S. gross domestic product rose 3.8 percent, compared with economists' forecasts for a rise of 3.7 percent.
But Federal Reserve Board Governor Ben Bernanke had given the market some reason to expect a strong U.S. growth figure, saying on Thursday he expected the revision to show growth of around 4 percent.
"Fed governor Bernanke said GDP was going to be around 4 percent, so 3.8 percent is actually lower than expected. The dollar is weakening gradually," said Grant Wilson senior foreign exchange dealer with Mellon bank in Pittsburgh.
The euro (EUR=) pushed up to around $1.3200 according to data from around $1.3170 shortly before the report and flat compared with its levels late on Thursday in New York. The euro hit a six-week high around $1.3270 earlier this week.
Against the yen (JPY=) the dollar slipped to 105.22 yen, from around 105.40 yen shortly before the report and down about 0.1 percent.
"The numbers were a little bit better than expected for U.S. GDP. The price deflator was slightly higher than expected. But consumption expenditures were slightly lower. That is tempering any U.S. dollar purchases," said Andrew Busch, global foreign exchange strategist with Harris Nesbitt in Chicago.
Consumer spending was up 4.2 percent in the fourth quarter.
At 10:00 a.m. EST, U.S. existing homes data is slated for release. Economists' median forecasts are for 6.74 million in January.
Earlier on Friday, the dollar had firmed, recovering from a recent six-week low against the euro as investors had braced for the U.S. growth report, betting on a strong reading on the world's largest economy, and before next week's U.S. manufacturing and payrolls reports.
Many analysts believe the market is torn between the dollar-positive factors of rising official interest rates and strong growth on the one hand, and the persistent dollar negatives of the massive U.S. current account and budget deficits on the other.
Fears that foreign central banks are diversifying their reserves away from the U.S. currency have also recently weighed on the dollar.
Earlier in Europe, the British pound briefly fell a third of a U.S. cent after data showed slightly disappointing fourth-quarter growth and a sharp drop in UK mortgage approvals in January. The UK economy grew an unrevised 0.7 percent on the quarter in the final three months of last year when the market was looking for a 0.8 percent rise.
The British Bankers' Association said UK loan approvals for home purchases fell 43 percent in January from a year earlier.
Early morning in New York, sterling (GBP=) was trading at $1.9115, up about 0.1 percent from late Thursday levels.