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Dollar Drops Against Euro As Fed Remains On Hold

The dollar fell against the 13-nation euro Friday, a day after the Federal Reserve left interest rates unchanged.

In late European trading, the euro rose against the dollar while the dollar rose against the Japanese yen.

The euro was up in the face of positive news Friday from Washington, following the Fed's decision to keep interest rates unchanged at 5.25 percent on Thursday.

In making its decision, the U.S. central bank said it was optimistic about economic growth, but its main concern remains that inflation will fail to moderate.

Higher interest rates, a weapon against inflation, can bolster a currency by giving better returns on certain kinds of investments.

On Friday, the U.S. Commerce Department reported that, for the second month in a row, consumer spending was up by 0.5 percent.

Incomes, the fuel for future spending, rebounded in May, growing by 0.4 percent. That was an improvement from the 0.2 percent drop reported for April.

In other economic news, construction spending rose 0.9 percent in May, the biggest gain in nearly 1 1/2 years, the department said in a second report.