Dollar slips on weak data, yen on back foot as BoJ stays pat

Japanese Yen
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The dollar fell against a basket of currencies on Friday on weaker-than-forecast data on housing and consumer sentiment, while the yen weakened after the Bank of Japan kept interest rates steady and signaled it was in no hurry to tighten policy.

The greenback has hovered near its lowest since November as a batch of disappointing economic readings, together with the lack of progress on fiscal stimulus from Washington, have overshadowed the outlook on more rate hikes from the Federal Reserve.

Earlier Friday, the government said U.S. home construction fell for a third consecutive month in May to its lowest in eight months, while the University of Michigan said its gauge on consumer sentiment deteriorated in early June.

"It raises some doubt on U.S. growth for the rest of the year," said Minh Trang, senior currency trader at Silicon Valley Bank in Santa Clara, California.

The index that measures the greenback's broader strength was down 0.29 percent at 97.15, putting it on track for a 0.15 percent decline on the week.

Friday's dour U.S. data helped erase the greenback's initial gains against the yen, which had slid to a two-week low versus the dollar.

The yen weakened with the Bank of Japan nowhere close to the Federal Reserve's path to normalize monetary policy as domestic inflation has remained sluggish. Governor Haruhiko Kuroda said there was "some distance" to achieving the BoJ's inflation target of 2 percent, and it was "inappropriate" to say how the Bank would exit its massive stimulus program.

That ran contrary to market speculation in the past month the BoJ could be considering its own plan for eventually withdrawing emergency stimulus for the world's third largest economy.

The yen was down 0.08 percent per dollar to $110.82.

"The theme continues to be the potential for further yen weakness because they (the BoJ) are still grappling with the deflationary mindset of the Japanese consumer," said Martin Arnold, FX strategist at ETF Securities in London.

The euro was up 0.48 percent per dollar at $1.1197, but about a cent below a seven-month peak of $1.1296 hit before the Fed's widely expected rate hike on Wednesday.