NEW YORK (AP) — The dollar steamed higher Friday as concerns increased over the stability of the eurozone economy and the difficulties of its weaker members as U.S. reports showed subdued U.S. inflation, dropping wages and a drop in manufacturing.
The low-yielding dollar tends to benefit on worse-than-expected economic and corporate news as traders forsake riskier stocks, commodities and emerging-market currencies for bets on the safety of the U.S. currency.
The 16-nation euro fell to $1.4382 in morning trading in New York from $1.4504 late Thursday. The British pound slid to $1.6287 from $1.6332.
But the dollar broke from its upward pattern for the day by slipping to 90.89 Japanese yen from 90.98 yen.
The U.S. government said on Friday that consumer prices rose 0.1 percent in December, while core inflation, which excludes volatile food and energy prices, also rose 0.1 percent. For the year, prices rose 2.7 percent, even as inflation-adjusted weekly wages fell 1.6 percent for the year.
Subdued inflation allows the Federal Reserve to keep interest rates at their current range near zero. That could weigh on the dollar.
The government also said industrial production rose 0.6 percent last month, thanks to gains from utilities due in harsh weather. But manufacturers produced 0.1 percent less than in November.
The U.S. data kept the dollar on its upwards course from overnight trading after European Central Bank President Jean-Claude Trichet said Thursday that it was “absurd” to suggest troubled Greece could leave or be kicked out of the eurozone. His statements did little to allay traders’ concerns about the country’s economy.
Greece is set to report a budget deficit of just under 13 percent of gross domestic product in 2009, way above the 3 percent limit allowed for by euro rules intended to support the shared currency. Its crisis has shocked markets and compelled the Greek government to unveil emergency budgetary measures.
Trichet affirmed that the eurozone’s stronger countries will not rescue the weaker ones.
There are also concerns about public finances in Portugal, Ireland and Eastern Europe.
Meanwhile, German Chancellor Angela Merkel warned in comments released Thursday that difficult times lay ahead for the euro given the divergent economic situations across the continent but said it would not be right for Germany to impose changes on Greece.
Germany has also said that it expects its budget deficit to be well above the 3 percent limit this year.
Market rumors of a Merkel resignation also weighed on the euro, analysts said, but Merkel’s spokesperson dismissed the idea.
Meanwhile, the dollar rose to 1.0259 Swiss francs from 1.0181 francs late Thursday, and gained to 1.0286 Canadian dollars from 1.0229.