LONDON, Aug 11: The dollar weakened against the euro and yen Thursday on the eve of US trade data that is expected to show a widening deficit, analysts said. The euro rose to $1.2410 in European trading from 1.2376 late on Thursday in New York.

The dollar stood at 110.22 yen from 110.62 on Thursday.

In terms of the outlook for the dollar, tomorrow’s trade number has now become a significant risk, HBOS currency analyst Steve Pearson said.

In this context we doubt the dollar will garner much support from what is likely to be a very strong (US) retail sales report today, he added.

The dollar was under pressure also as the Federal Reserve ruled out a more aggressive monetary policy after hiking US rates by a quarter point.

The increase on Tuesday took the headline Fed funds rate to 3.5 per cent, and economists expect the US central bank to take further incremental steps higher to at least 4.0 or 4.25 per cent by the end of the year.

Elsewhere, the yen advanced further against major currencies on rising support for the Japanese government, renewed hopes for economic recovery and robust stocks, dealers said.

With the Nikkei index (of the Tokyo Stock Exchange) going so strongly, the market condition is conducive to yen buying, said Kosuke Hanao, head of foreign exchange at the Royal Bank of Scotland.

The Nikkei’s robust performance followed a string of bright news from Japan.

Earlier this week, the Japanese government and central bank separately upgraded their assessments of the world’s second-biggest economy.

The emerging optimism about the macroeconomy and the stock market now support interest in yen-denominated assets, Hachijuni Bank foreign exchange dealer Yasuhiro Takai said.

The euro was changing hands at $1.2410 against 1.2376 late on Thursday in New York, 136.75 yen (136.95), 0.6882 pounds (0.6894) and 1.5544 Swiss francs (1.5557).

The dollar stood at 110.22 yen (110.62) and 1.2525 Swiss francs (1.2568).

The pound was being traded at $1.8032 (1.7946), 198.77 yen (198.58) and 2.2586 Swiss francs (2.2557).

On the London Bullion Market, the price of an ounce of gold stood at $438.40 against $436.55 late on Thursday.

—AFP