Dollar Bounces Back Ahead Weekend

The U.S. unit found additional support on a decline in risk appetite that sent traders

from higher-yielding currencies, such as the euro, pound and Australian dollar.

This was also a function of profit-taking after the dollar declined to one-week lows a day earlier against the euro, U.K. pound, Swiss franc and Australian dollar.

Currency markets have been very volatile over the last week on conflicting signs of economic stabilization and fears over the U.S. Treasury auctions.

Comments reported Friday from Japanese Finance Minister Kaoru Yosano swung the pendulum in favor of the dollar.

Yosano said Japan, the world's second-largest foreign owner of Treasurys, would keep buying the securities, easing worries that foreign investors may turn their back on U.S. debt.

The dollar also found some buyers on a Wall Street Journal report suggesting the Federal Reserve is unlikely to expand its purchases of Treasurys and other assets at the June 23-24 policy meeting.

Friday afternoon in New York, the euro was at $1.3995, down from $1.4107 late Thursday. The dollar was at Y98.39, up from Y97.59, according to EBS. The euro was at Y137.75, up slightly from Y137.68, and the U.K. pound was at $1.6436, down from $1.6589. The dollar was at CHF1.0807, up from CHF1.0707 late Thursday.

Data out of Europe earlier Friday also weighed on the euro. It showed euro-zone industrial production slumped by the sharpest annual rate on record in April. The outcome was much weaker than anticipated, and the data suggested the recession is far from being over.

"As the global economic tide rises, some ships look in better shape than others," according to a research note from Barclays Capital. "Europe remains the laggard."

U.S. data Friday had little impact on currencies. U.S. import prices rose 1.3% in May, the biggest monthly rise since July 2008 and close to economists' expectations for a 1.5% increase. A Reuters/University of Michigan survey on consumer sentiment showed a modest rise in June from May.

Germany's deputy finance minister said foreign exchange won't be an issue at this weekend's Group of Eight meeting, but currency traders are nonetheless watching for any surprise announcements or comments by officials on the sidelines.