NEW YORK, July 16: The dollar traded mainly higher on Friday after solid economic data reinforced the view that the US economy is on solid footing, although gains were tempered by tame inflation that may keep interest rates low.

The euro dipped to 1.2029 dollars from 1.2079 on Thursday evening.

The dollar edged lower however to 112.21 yen compared with 112.30 yen on Thursday.

The slew of economic data for the US released over the last three days has provided significant clarity to the rebound in US economic growth rates from the ‘soft patch’ period that plagued the figures over the February-May period, said Mike Englund, an analyst at Action Economics.

The dollar was supported by a range of economic data, notably a benign wholesale-level inflation reading earlier on Friday and a better-than-expected headline Empire State Index, which measures manufacturing activity in the state of New York.

The latest set of unexpectedly tame monthly consumer price and wholesale-level inflation reports damped some hopes that the Fed will continue raising rates to 4.0 per cent or higher. Higher rates would increase demand for the US currency and send the dollar higher.

The Labour Department reported that US producer prices were unchanged in June despite higher energy prices.

The core rate of inflation at the wholesale level fell 0.1 per cent. Economists had expected the producer price index to rise 0.4 per cent in June, with growth in core inflation pegged at 0.1 per cent.

The Japanese currency was supported by a report in the Financial Times that China will revalue its currency in August ahead of a planned visit to Washington by President Hu Jintao in September.

A revival in yuan revaluation expectations would prove supportive for Asian currencies in general.

The Japanese currency was recently weighed down by record-high oil prices and the combination of continued slight deflation and the Bank of Japan’s ultra-easy monetary policy.

The pound was exchanging hands for $1.7503 compared with $1.7564 on Thursday. —AFP