The U.S. dollar gave up some of this week's gains versus major rivals Friday, slipping versus a rebounding euro as worries about Greece's debt problems eased somewhat.
The euro traded at $1.3401 U.S., up from $1.3352 versus the dollar in North American trade late Thursday. The euro rose 0.6% versus the Japanese yen to trade at 125.56 yen.
The single currency erased earlier losses on Thursday after European Central Bank President Jean-Claude Trichet declared that default was "not an issue" for Greece. Read about Trichet's comments.
Greek government bond yields, which soared to 11-year highs this week on fears of default and concerns about Greek banks' ability to fund themselves, eased back somewhat after Trichet's monthly news conference.
But borrowing costs remain extremely elevated, with the yield premium demanded by investors to hold 10-year Greek bonds over benchmark German bunds at the 10-year level remained at more than 4 percentage points on Friday.
Some strategists said there remained only limited room for a euro rebound.
China is the other hot topic in forex markets.
A growing number of experts and investors believe that China will ease its currency's peg to the U.S. dollar, although the timing of the move and the details of new currency regime remain unknown.
If China allows its currency to significantly appreciate against the U.S. dollar, the Australian dollar and the New Zealand dollar would likely be the biggest losers among Group of 10 developed countries' currencies, and Japan's yen the biggest winner, according to Barclays Capital foreign exchange analysts.
The Canadian dollar retreated versus the U.S. unit after March jobs data proved weaker than expected. The U.S. dollar fetched 1.0062 Canadian dollars, up 0.4% on the day.
Statistics Canada said 18,000 jobs were added in March while the unemployment rate remained unchanged at 8.2%. Economists surveyed by Dow Jones Newswires had forecast a rise of 26,000 jobs and a drop in the unemployment rate to 8.1%.
The South African rand rose following the World Bank's approval of a $3.75 billion loan for South African power utility Eskom that aims to ease the nation's severe electricity shortages. The rand rose 0.2% to trade at 7.25 to the U.S. dollar.
The dollar index, which measures the U.S unit against a trade-weighted basket of six major currencies, traded at 81.409, down slightly from 81.537 late Thursday. For the week, the index is up 0.8%.
Against its Japanese counterpart, the dollar bought 93.66 yen, up from 93.39 yen in late North American trading Thursday.
The British pound rose to $1.5368 U.S. from $1.5271 U.S.
A stronger than expected rise in March producer price inflation, which rose at an annual rate of 5% versus 4.2% in February, helped the pound add to gains, said Stephen Gallo, head of market analysis at Schneider Foreign Exchange.
A weak pound is seen boosting input prices and adding to inflationary pressures, which may continue to cause unease among Bank of England policymakers and other authorities, despite the central bank's central view that consumer inflation is set to fall below the 2% target in coming months as a result of the large amount of spare capacity in the economy created by the recession.
