Dollar holds gains

The dollar was little changed on Friday, holding gains made after oil prices pulled back from a record high, while weaker eurozone services sector data did little to dent the view that the region's economy remains firm.
The dollar was supported on profit taking after it has fallen broadly in the past few weeks, but the US currency lingered near a one-month low against a host of currencies including the euro on lingering worries about the US economy.
The euro was resilient to a bigger-than-expected fall in eurozone service sector PMI, which matched a 4 1/2-year low hit in January, as it did little to change the view that the region's economy remains stronger than that of the US.
"The euro was unmoved by the numbers and the overall tone for the euro is firmer," said Mitul Kotecha, head of global foreign exchange research at Calyon.
"Compared to the US numbers eurozone data has been firm and the PMI numbers came on the back of strong Ifo and Q1 GDP data."
The euro traded at $1.5715 at 0812 GMT, barely changed on the day, but off a one-month high of $1.5814 touched on Thursday. Oil prices held about $3 below record highs of $135 a barrel, helping buoy the dollar against the single European currency. But the dollar slipped 0.2 percent to 103.82 yen.
The dollar tends to move in the opposite direction to oil, and it took a hit on Thursday on the commodity's surge, which had fuelled concerns about the US economy just as the Federal Reserve is expected to halt its run of interest rate cuts to bolster the country's growth.
Against a basket of currencies, the dollar was flat at 72.150. A flash reading of the RBS/NTC's eurozone services PMI came in at 50.6 in May, sliding from 52.0 in April and lower than expectations for a 51.7 reading. German services figures fell to 53.7 in May from 54.9 last month, while manufacturing held roughly steady.
French services PMI slipped to 50.7 in May, weaker than market expectations and hitting its lowest since June 2003. A reading of French consumer spending also came in lower than forecast.
Still, the euro held its ground, partly because recent solid data from the eurozone's largest economy, Germany, nurtured speculation that the European Central Bank was more likely to raise rates than cut after keeping them at 4 percent this week.
Earlier this week, the Fed downgraded its 2008 US economic growth forecast and raised its inflation outlook. The Fed has cut interest rates to 2 percent from 5.25 percent since September, but markets now expect the central bank to hold steady and possibly raise rates by the end of the year.
Traders said they were waiting for a US report on existing home sales due on Friday as well as crude oil moves for clues on the dollar's direction. "As the dollar lacks direction, the focus will be on crude if home sales data comes in weak as expected," said Tomoko Fujii, Bank of America's head of economics and strategy for Japan.