The euro rallied against the dollar and the yen on Friday after budget cuts in Spain boosted hopes the country could stick to an austerity path, though mixed US data capped gains. Spain presented a budget that aims to save more than 27 billion euros in 2012 through spending cuts and revenue increases. Also in Europe, euro zone finance ministers agreed to raise their financial firewall to contain the region's debt crisis.
Both moves had been largely expected by markets but the euro still rallied. US data did little to push currencies from recent ranges. Gains were capped, however, after the pace of business activity in the Midwest slowed and gains in consumer spending outstripped an increase in income. The euro rose 0.3 percent against the dollar to $1.3332 and gained 0.7 percent to 110.35 yen.
The greenback swung between gains and losses against the yen but last traded up 0.4 percent at 82.73 yen with the peak at 82.78 and the low at 81.82 yen. The dollar was on track to advance 7.5 percent against the yen this quarter, its first quarterly gain since the first quarter of 2011 and it's biggest quarterly gain since the first quarter of 2009.
The euro on Friday hit its lowest against the Swiss franc since mid-September, according to Reuters data, as investors tested the resolve of the Swiss National Bank to hold the euro/floor at $1.2000 francs. The single currency fell to as low as 1.2026 francs, its lowest since September 14. It was last at 1.2040 francs, down 0.1 percent.
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