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Dollar gains as low eurozone inflation hits euro

The dollar picked up speed against the euro on Friday after fears of deflation in the eurozone rose following a report showing slower price gains.

NEW YORK: The dollar picked up speed against the euro on Friday after fears of deflation in the eurozone rose following a report showing slower price gains.

Meanwhile, the yen gained against the other majors. This was likely to be driven by persistent worries over turmoil in the emerging economies.

At 2200 GMT, the euro was at $1.3487, down from $1.3554 late Thursday.

The dollar though slipped to 102.03 yen from 102.71, and the euro fell to 137.61 yen from 139.21, the euro's lowest level against the Japanese currency since early December.

The euro's slide came as the European Union's statistics agency Eurostat reported inflation in the 18-nation euro area, still struggling to recover from its debt crisis, slowed to 0.7 per cent in January from 0.8 per cent in December.

The figure is far below the European Central Bank's target of just below 2.0 per cent and will be high on the agenda when ECB chiefs meet next week, with markets speculating on whether they will move further to stimulate growth.

Unemployment, meanwhile, stayed at 12.0 per cent in December, unchanged since October.

"The latest eurozone unemployment and inflation data maintained the pressure on the ECB to do more to ward off deflation risks, perhaps as soon as next week," said Jonathan Loynes of Capital Economics.

Meanwhile, the more bullish US economic growth data and comments from the Federal Reserve on Wednesday supported a stronger dollar, with the Fed moving to ratchet down its stimulus.

The British pound also lost ground on the greenback, moving to $1.6435 from $1.6489.

The dollar rose to 0.9060 Swiss franc from 0.9023.

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