Dollar lower before key economic data

LONDON (AFP) - The dollar fell against the euro and yen on Friday as the market awaited publication of US housing figures and data on consumer sentiment in the world's biggest, but struggling, economy.

In morning deals, the European single currency rose to 1.5728 dollars from 1.5683 dollars late on Thursday in New York.

Against the Japanese currency, the dollar dropped to 106.96 yen from 107.19.

"New (US) home sales look likely to fall further, and could conceivably slip under 500,000 for the first time in nearly seventeen years," Calyon economist Daragh Maher said ahead of the data due out later on Friday.

"The weakness in the dollar yesterday (Thursday) after weaker than expected existing home sales shows that while a struggling US housing market should not be news to the market, it can still provoke a reaction."

Sales of existing US home fell by 2.6 percent in June as inventories rose and prices dropped with buyers still hesitant in the face of a horrific market slump, industry data had showed on Thursday.

With the US economy weak, "it is still difficult to turn bullish (positive) on the dollar," said Yosuke Hosokawa, head of foreign exchange trading at Chuo Mitsui Trust Bank.

Japan's core inflation hit a new decade high of 1.9 percent in June, but the market impact was muted because analysts do not expect Japan's central bank to raise interest rates any time soon.

In London trading, the British pound steadied after data that showed Britain's economy has come closer to a recession.

Gross domestic product (GDP) grew by only 0.2 percent in the April to June period compared with the first three months of 2008 -- the slowest pace for more than three years, according to the Office for National Statistics.

The data matched analyst consensus forecasts after Britain's economy grew 0.3 percent in the first quarter of 2008 compared with the final three months of 2007.

In London morning trade on Friday, the euro changed hands at 1.5728 dollars against 1.5683 late on Thursday, at 168.05 yen (168.12), 0.7895 pounds (0.7892) and 1.6244 Swiss francs (1.6253).

The dollar stood at 106.96 yen (107.19) and 1.0342 Swiss francs (1.0364).

The pound was at 1.9894 dollars (1.9865).

On the London Bullion Market, the price of gold rose to 932.97 dollars per ounce from 928 dollars late on Thursday.

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