The dollar remained under pressure on Friday after second-quarter growth data revealed that the recession in the US had eased more than expected, leading investors to continue seeking yield on riskier assets.

Government data showed that gross domestic product in the second quarter fell 1 per cent, better than the expected 1.5 per cent.

But gains against the dollar were hard fought as investors digested downward revisions to the GDP of previous quarters – particularly the first quarter, cut back to minus 6.4 per cent from minus 5.5 per cent.

The euro climbed 0.8 per cent against the dollar to $1.4174 and the yen added 0.3 per cent to Y95.29 while sterling was up 0.4 per cent to $1.6553. The higher-risk commodity currencies and emerging markets units presented a mixed picture of the appetite for risk after the US data.

Positives to be taken from the numbers included large inventory drawdowns during both quarters of 2009, said Alan Ruskin of RBS Greenwich Capital. “This bodes very well for GDP data in the second half since the change in inventories should be very positive.

“I could see [inventories] data adding to third-quarter GDP forecasts and therefore playing to the positive risk tone.”

Sweden’s krona responded positively to its own GDP data, which showed flat quarter-on-quarter growth. This left annual GDP at minus 6.2 per cent, beating expectations of minus 6.6 per cent. The krona rose 1.8 per cent against the dollar to SKr7.2805 and 1.1 per cent versus the euro to SKr10.3186.

New Zealand’s dollar rose 0.9 per cent against its US namesake to $0.6574.

The Kiwi is one of the most popular destinations for carry trade activity, where low-yielding assets such as the dollar are sold to fund higher-yielding purchases.

On Thursday the Reserve Bank of New Zealand left interest rates at 2.5 per cent. This compares with the US target rate of between zero and 0.25 per cent.

Over a volatile week, the Kiwi was up 0.3 per cent against the dollar while the krona added 2.9 per cent, hitting its highest level against the dollar since October.

Sterling was up 0.8 per cent over the week against the dollar, helped by encouraging housing data and better-than-expected results from leading UK corporations, including BT and Cadbury. The pound was up 1 per cent over the week against the euro to £0.8561.

There was focus on China this week as the Shanghai Composite equity market fell 5 per cent on Wednesday on fears that the authorities would try to rein in lending. A resulting dollar rally was short-lived after the People’s Bank of China moved quickly in the following session to say it would keep its monetary policy loose for as long as necessary.

On Tuesday the dollar index, an important measure of the US currency’s value against a basket of currencies, fell to its lowest level of the year but ended the week flat as both the euro and the yen lost ground over the week.

The Australian dollar climbed 1.6 per cent over the week to $0.8299, hitting its highest level since the fall of Lehman Brothers after the country’s central bank suggested that it was prepared to raise interest rates once economic growth returned.

Copyright The Financial Times Limited 2018. All rights reserved.

Comments have not been enabled for this article.