Dollar under pressure in London

The dollar fell to its lowest in more than two months against the euro and Swiss franc on Friday as jitters ahead of US trade data increased selling pressure after Thursday's weaker-than-expected retail sales report.
It also hit a six-week low versus the yen on investor concern that the trade figures might swing market focus back to structural problems in the US economy at a time when growth factors are not giving the dollar enough support.
"The market is looking for a worse number than the previous month. You could argue that a lot of that is being priced in euro/dollar rate," Mansoor Mohi-uddin, chief currency strategist at UBS, said.
"Investors are looking at the possibility that higher oil prices that we saw in June compared to May and also the marginally higher Chinese trade surplus may result in an upside surprise - ie it (trade deficit) gets wider," he added.
The trade report at 1230 GMT is expected to show the June trade deficit widened to $57.30 billion from $55.35 billion in May as steep oil prices boosted the cost of imports and the dollar's strength damped demand for exports.
Worry about the United States' ability to fund its current account deficits was the major driver behind the dollar's fall in the three years to 2004. In 2005, the dollar pared some losses against the euro on the back of rising US interest rates.
At 1145 GMT the dollar traded roughly steady on the day but near multi-month lows against major currencies.
The US currency hit its lowest level since late May at $1.2486 per euro, before edging up to $1.2463. It fell to 1.2434 Swiss francs, its lowest level from June 8, and hit a six-week low at 109.36 yen.
The dollar's rally earlier this year stalled in July and investors are waiting for new signals to give the currency direction.
The Federal Reserve is expected to raise interest rates again but many market players are concerned that much of the support for the dollar from hikes in borrowing costs has already been priced into the currency's exchange rates.
Earlier this week the Fed raised its funds rate for a 10th straight time to 3.5 percent and said more "measured" increases were likely.
"Dollar sentiment is starting to deteriorate and the trade numbers will be really key as to whether the dollar can continue this move lower," said Ian Gunner, head of foreign exchange research at Mellon Bank.
Meanwhile, growing confidence in Japan's economy, foreign buying of Tokyo stocks and easing worries about a September 11 snap election have helped drive the Japanese currency up almost 2.5 percent against the dollar since Monday.