The dollar was little changed against major currencies on Friday after key US ISM data on manufacturing was in line with expectations, as the market remained cautious on the prospects for the US economy.
The single European currency fell to US$1.2398 in late trade from US$1.2435 late Thursday in New York.
The dollar rose to ?110.39 from ?110.02 on Thursday.
The Institute for Supply Management reported that US factory activity had eased just slightly, with its headline index falling to 58.5 percent last month from 59.0 in August, suggesting that the US economic recovery was gaining some traction.
"This report was not as strong as the Chicago PMI report for September. Nevertheless, the level of this index is consistent with continued very solid growth in manufacturing activity," Bear Stearns analysts said in a statement.
The solid report caused only a very limited rise in the dollar, however, with the market still remaining cautious on the outlook for the US economy amid fears over the impact of higher oil prices.
"We continue to view levels of US yields as low relative to our own expectations for growth, inflation and Fed [Federal Reserve] policy in the coming months, and are thus cautious about the prospects for the dollar to break out of its broad consolidation range and resume its structural downtrend at this time," said Daniel Katzive, currency analyst at UBS.
Investors are also unwilling to adjust positions ahead of the Group of Seven meeting this weekend, analysts said.
The yen meanwhile remained stable at lower levels against the dollar, experiencing a touch of consolidation after rising on the back of the morning's strong Tankan survey.
Elsewhere, the pound recovered slightly but remained weak after falling sharply on the back of a survey showing British manufacturing activity weakened in September.
The pound fell to an eight-month low against the euro earlier in the day, taking the single European currency above the psychologically important ?0.69 barrier.
Analysts said markets were now far less certain that the Bank of England would put up interest rates again in November as previously expected.
The central bank has raised rates by a quarter point five times since November last year, taking the key repo rate to 4.75 percent, with expectations of further hikes previously providing the reason for the pound's outperformance.
News that British Prime Minister Tony Blair had undergone what was said to be a minor procedure to correct a heart problem also added to the pound's woes.
The euro changed hands at US$1.2398 against US$1.2435 late on Thursday in New York, ?136.91 (?136.79), ?0.6897 (?0.6861) and 1.5494 Swiss francs (SF1.5492).
The dollar stood at ?110.39 (?110.02) and SF1.2496 (SF1.2455).
The pound was at US$1.7976 (US$1.8117), ?198.49 (?199.27) and SF2.2465 (SF2.2565).
On the London Bullion Market, the price of an ounce of gold stood at US$418.10 against US$415.65 late on Thursday.
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