LONDON (AFP) -– The dollar recovered against the euro and the yen on Friday, while all eyes were on the Japanese currency amid speculation that Tokyo may intervene to curb its rise.

In late London trade, the euro fell to 1.2687 dollars from 1.2821 dollars in New York late Thursday. Against the Japanese currency, the dollar rose to 85.63 yen from 85.38 yen on Thursday.
The dollar won back ground after falling against most leading currencies on Thursday as grim economic data dampened hopes for the U.S. recovery.
“This double whammy of deteriorating U.S. data has dealt a significant body blow to investor sentiment and reinforced fears about a double-dip recession,” said Michael Hewson, a foreign exchange analyst at CMC Markets.
“It has also given investors a bit of a dilemma with respect to the dollar, as to whether to sell it due to the shockingly bad data, or buy it, for its safe haven qualities.
To “get around this problem investors have been diversifying into yen, Swiss francs and gold, with all three gaining significant ground. The pound has benefited to some extent as well,” Hewson added.
Traders were on Friday awaiting Tokyo's moves to stall the yen's rise, which pushes up the cost of Japan's exports, making them less competitive.
Analysts said sentiment was soured by uncertainty amid rumors that the Bank of Japan (BoJ) may hold an emergency meeting on new economic measures as early as Monday.
The Sankei Shimbun daily reported Thursday that the BoJ emergency meeting would take place before central bank chief Masaaki Shirakawa meets Prime Minister Naoto Kan on Monday.
“We are hearing rumors that the BoJ may hold an emergency meeting,” said Yuji Saito, an analyst at Credit Agricole. “Market players are looking to possible moves by the Bank of Japan,” he said. The “euro is also losing direction amid the uncertainty.”
The dollar dropped sharply last week to 84.90 yen, near its 15-year low, hurting the outlook for Japan's economic recovery.
Fears that Japan's recovery from recession is fading were heightened by weaker-than-expected gross domestic product data this week, showing that the economy grew by an annualized 0.4 percent in April-June.
Japan's finance minister said Friday he was closely watching currency markets as the stubbornly strong yen threatens the country's export-led recovery from recession.
In late London trade on Friday, the euro changed hands at 1.2687 dollars against 1.2821 dollars on Thursday, at 108.64 yen (109.47), 0.8177 pounds (0.8218) and 1.3158 Swiss francs (1.3229).
The dollar stood at 85.63 yen (85.38) and 1.0372 Swiss francs (1.0317).
The pound was at 1.5515 dollars (1.5597).
On the London Bullion Market, the price of gold fell to 1,223.50 dollars an ounce from 1,233.50 dollars an ounce on Thursday.