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Dollar stumbles against euro, vagueness saps yen

The US dollar stumbled against the euro on Friday as US economic data dashed expectations for a rate hike, while the yen was hammered by the lack of a clear signal on rate moves by the Bank of Japan.

The euro rose to US$1.3379 at 9pm GMT, from US$1.3310 in New York late on Thursday.

The US currency gained ground against the New Taiwan dollar on Friday, rising NT$0.057 to close at NT$33.142. A total of US$1.01 billion changed hands during the day's trading.

The US dollar opened at NT$33.065 and fluctuated between NT$32.985 and NT$33.150.

The greenback meanwhile jumped to ¥123.45, up from ¥122.88 on Thursday.

US economic figures, including those for core inflation, industrial production and consumer confidence, offset a stronger-than-expected headline inflation number and a strong Empire survey on manufacturing activity in the New York region.

"Receding US inflationary pressures, flat industrial production and weaker consumer confidence are exactly what the doctor ordered for the struggling European currencies, which are now extending their rebound," Ashraf Laidi at CMC Markets said.

US figures put headline inflation at 0.7 percent last month, a bigger rise than the 0.6 percent expected, while the more closely watched core rate rose by just 0.1 percent, below forecasts for a slightly bigger 0.2 percent rise.

"Core CPI [consumer price index] has fallen to the lowest year-on-year level in 12 months, lending further support to the US Fed's case that slower growth will bring elevated core inflation back in line with price stability without resorting to higher [interest] rates," Bank of New York analyst Michael Woolfolk said.

Further data showed industrial output was flat last month, against expectations for a 0.2 percent rise, while the University of Michigan's consumer sentiment index fell to 83.7 this month, well below forecasts for a reading of around 87.9.

Meanwhile, the yen was another major focus for currency markets, hitting a fresh record low against the euro and a four-and-a-half-year low against the US dollar of ¥123.66.

The yen has been pressured recently by ongoing popularity for the carry trade -- where investors borrow in low-yielding currencies such as the yen to invest in higher-yielding assets elsewhere.

Losses were extended however after Bank of Japan (BOJ) governor Toshihiko Fukui expressed little concern about the currency's weakness and gave no hints on the timing of any future interest rate rise. On top of that, although the BOJ's policymakers decided to leave its overnight rate unchanged at 0.5 percent, there was some disappointment among market participants that there were no votes for a hike.

In late New York trading, the dollar stood at 1.2415 Swiss francs from SF1.2461 on Thursday.

The pound was being traded at US$1.9767 after US$1.9696.
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