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US dollar slips on soft economic data

The US dollar traded mostly lower on Friday as traders mulled soft US economic data and generally downbeat comments a day earlier by Federal Reserve chief Ben Bernanke.

The euro was quoted at US$1.4683 at 10pm GMT after US$1.4637 late on Thursday in New York. The dollar meanwhile fetched ¥107.72, down from ¥107.85 on Thursday.

Dollar sentiment was dampened as a closely watched consumer sentiment index fell to a 16-year low.

"With house prices plummeting, employment falling, stock markets in turmoil and gasoline prices still above US$3 a gallon, it is little wonder consumers are unhappy," said Paul Ashworth, US economist at Capital Economics.

"But the extent of the decline this month suggests that a degree of panic has now set in -- this is bad, very bad," he said.

The markets also reacted to news of a tepid 0.1 percent rise in US industrial production in January, and a regional manufacturing index from the New York Federal Reserve at minus 11.7, the first negative reading since 2005.

The dollar started the day on a weak note, triggered by Bernanke's assessment of the US economy on Thursday. Bernanke told a Senate committee there were strong "downside risks" to US economic growth and that the Fed was ready to respond as necessary, a hint that dollar-negative lower interest rates might be on the way.

"Bernanke focused on the risk that tighter credit conditions and deteriorating consumer spending could slow the US economy further," Patrick Fearon at AG Edwards said.

"Bernanke said that he expected the economy to start doing better by the second half of 2008, which we have argued should be positive for the dollar. Nevertheless, the market is focused on the negative aspects of Bernanke's testimony, and the dollar remains under pressure today," Fearon said.

In late New York trading, the dollar stood at 1.0927 Swiss francs after SF1.0979 on Thursday.

The pound was at US$1.9612 from US$1.9682.
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