Aussie rallies after strong GDP; Euro higher on strong inflation, Greek deal

On Wednesday the Australian dollar was higher as the country's GDP rose more than expected in the first three months of the year.

The euro was also given a boost after data showed that inflation came back in the euro zone and as markets were upbeat regarding a deal between Greece and her creditors.

AUD/USD rose 0.34% to 0.7800.

USD/JPY dipped to 124.00, down 0.10% after comments from the Bank of Japan board member, Sayuri Shirai, who suggested the current pace of government bond buying will remain in place.

Australia's GDP expanded 0.9% in the first quarter, above the gain of 0.7% expected quarter-on-quarter and for a yearly pace of 2.3%. The faster than expected growth pace will challenge assumptions on the scope for further rate cuts in the near term.

Earlier, the AIG services index in Australia declined to 49.6 in May from 49.7.

EUR/USD was steady at 1.1153.

Eurostat, EU's statistics office, said on Tuesday consumer prices in the region climbed 0.3 percent year-on-year last month after a flat reading in April, surpassing market expectations of a 0.2 percent increase.

Meanwhile, U.S. Treasury yields rose to two-week highs overnight after German Bund yields soared on the positive data.

The inflation data and corresponding rise in yields boosted the euro as well. The joint currency gained further support when the European Central Bank, the European Commission and the International Monetary Fund agreed on the terms of a cash-for-reform deal to be put to Greece in a bid to conclude four months of debt stalemate.

It was far from clear if the leftist government of Prime Minister Alexis Tsipras would accept the plan, but markets took it as an encouraging step forward.