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 In Europe, the first sight of German inflation data was likely to
emphasize the outlook for a prolonged period of easier monetary
policy, though that has done little to dampen the euro's strength so
far in 2014.
The New Zealand dollar hovered at its highest in nearly three years
as investors sought out higher-yielding currencies.
The dollar's failure to launch - it is a grand total of 0.04 percent
weaker since January against a basket of currencies - has been one
of this year's dominant trends on major currency markets, defying a
raft of forecasts it would soar higher.
That may yet happen, but it will require the numbers on the U.S.
economy to improve substantially. Latest consumer spending data on
Thursday fell short of expectations, and came close on the heels of
this week's steep downward revision to first-quarter growth.
"I have been sticking with the view that the dollar should sooner or
later be led higher by U.S. yields and I don't think I'm alone in
that, but it just doesn't want to go this week," said a senior
dealer with one London-based bank.
Against the yen, the dollar slipped about 0.3 percent to 101.38 yen
after falling as low as 101.315 yen, its lowest since May 21, as
U.S. yields scraped the bottom of their recent range.
Wednesday's revision prompted some analysts to cut their forecasts
for U.S. growth, but there were also those raising forecasts for the
second quarter and predicting that an improvement for the dollar was
only a matter of time.
Neil Mellor, a strategist with Bank of New York Mellon in London,
pointed to sentiment and other more current data that had been more
positive in the run-up to the GDP revision.
"It tells you a lot about the market's inclination that people are
focusing on backward- rather than forward-looking numbers," he said.
"The Federal Reserve will clearly use any sign of weakness as an
excuse to maintain the status quo (on rates) and the market wants to
use the dollar as a funding currency, hence favoring the yield plays
like the kiwi, sterling and others."
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The dollar index edged down 0.05 percent to 80.175, not far from a
one-month low of 80.075 struck earlier in the day. Against the euro,
it was almost unchanged at $1.3615.
KIWI NEARS POST-FLOAT HIGH
While a lot of market attention has focused on sterling and the
prospect of higher UK interest rates at the end of this year or the
beginning of next, New Zealand policymakers have already been
raising rates for months.
The RBNZ's cash rate is currently at 3.25 percent, among the highest
in the developed world and the kiwi has become a beacon to
yield-seeking investors in response, quietly assembling an almost
7-percent gain since the start of this year.
It traded at $0.8773 on Friday, having peaked at $0.8795, just half
a cent off the 2011 high of $0.8842. That is the strongest the
currency has been since it was floated in 1985.
Sterling also stood within striking distance of a near six-year
peak, having gained ground after Bank of England steps announced on
Thursday to cool Britain's housing market did not derail
expectations of higher rates.
The pound was broadly unchanged, trading at $1.7025, off a peak of
$1.7064 set on June 19.
(Editing by Catherine Evans)
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