LONDON (AFP) - The dollar fell back slightly against the euro and yen ahead of US retail sales and consumer confidence data and as dealers digested a cut to eurozone growth forecasts.
The single European currency rose Friday to 1.2921 dollars in early European trading from 1.2904 overnight in New York.
The dollar declined to 106.06 yen against 106.59 on Thursday.
Dealers said that comments from European Central Bank Jean-Claude Trichet, who on Thursday backed up his description of recent exchange rate movements as "brutal" and "not welcome", were limiting currency movements.
"Things have calmed a little," said Ken Wattret, economist at BNP Paribas.
"The verbal interventions of Trichet have played a part in that. There is a feeling that it`s the calm before the storm. Things could get worse for the dollar."
While data could play a part in further dollar losses, economic indicators were not the main issue for the market, Wattret said.
"There is a feeling of inevitability about the dollar adjustment. It`s a question to know whether it`s orderly, gradual, or whether it`s disorderly. For the moment, it seems it`s a bit more orderly than it was last week," he said.
Taking some of the shine off the euro, Eurostat reported that growth in the eurozone slowed to 0.3 percent in the third quarter from 0.5 percent in the second and 0.7 percent in the first.
Yearly growth, comparing third quarter 2004 to third quarter 2003, was 1.9 percent in the eurozone and 2.1 percent for the full 25-member European Union.
Meanwhile the European Commission trimmed its eurozone growth to a range of 0.2 to 0.6 percent in the fourth quarter this year and in the first three months of 2005.
The panel last month said growth in the two periods would be between 0.3 and 0.7 percent.
US data due later Friday was expected to show retail sales were pressured by weak auto sales, although holding up well elsewhere, while University of Michigan consumer sentiment index for November was forecast to post a slight gain.
The data releases "are likely to paint a positive picture, but recent reactions to US data suggest that it will provide no support to the dollar," said CALYON analyst Mitul Kotecha.
He added that currency markets were likely to remain nervous ahead of a meeting of the Group of 20 finance ministers and central bank governors in Berlin on November 19-21, given recent official comments that foreign exchange rates will be discussed.
Elsewhere, the yen held up despite the release of much weaker-than-expected gross domestic product numbers.
The Japanese economy grew a real 0.1 percent in the July-September quarter, or at an annualized rate of 0.3 percent, the Cabinet Office reported. The figures were way below forecasts for rises of 0.5 and 2.1 percent respectively.
The yen failed to react, however, in fact managing to gain ground immediately after the release, with rumours of a weak number circulating ahead of the announcement.
The euro was changing hands at 1.2921 dollars from 1.2904 late on Thursday in New York, 137.02 yen (137.57), 0.6997 pounds (0.7007) and 1.5221 Swiss francs (1.5192).
The dollar stood at 106.06 yen (106.59) and 1.1780 Swiss francs (1.1774).
The pound was at 1.8469 dollars (1.8411), 195.84 yen (196.25) and 2.1755 Swiss francs (2.1682).
On the London Bullion Market, the price of an ounce of gold stood at 433.80 dollars against 433.40 late on Thursday.
11/12/2004 - 13:19 GMT - AFP