LONDON, Oct 14: The dollar wilted here against the euro on Friday as reports of tame US core inflation and disappointing consumer confidence data suggested that the US Federal Reserve might move less aggressively to raise interest rates than had been foreseen.

The single European currency in late-day trade was at 1.2075 dollars, up from 1.2020 late Thursday in New York.

The dollar was meanwhile trading at 114.08 yen after 114.55.

The US Labour Department revealed that core inflation, which excludes food and energy, increased just 0.1 per cent rather than 0.2 per cent as expected on the market.

The news offset a huge 1.2 per cent surge in the overall Consumer Price Index (CPI), which was almost solely related to the recent jump in oil prices, as well as strong retail sales numbers.

US Federal Reserve officials have recently placed so much emphasis on the risks to inflation, particularly the potential for “second-round” effects from high oil prices, that the core CPI number took centre stage, said Daragh Maher at CALYON.

“The reality is that the Fed through its rhetoric has succeeded in making inflation, not growth, the principal focus, which means the dovish signal from the inflation reading should dominate the hawkish retail sales release in terms of market reaction,” he said.

Further bad news came later for the dollar with the release of very disappointing industrial production numbers and a weaker-than-expected key consumer confidence survey.

The University of Michigan’s consumer sentiment index fell to 75.4 points in October from 76.9 in September. The index fell sharply in September from a reading of 89.1 in August, in the wake of Hurricanes Katrina and Rita, but economists had expected a rebound this month to around 80.4.

“If the consumer confidence figure proves to be the first in a line of disappointing post-hurricane ‘bounces’, the current optimism on growth may be tested,” Maher said.—AFP