U.S. Dollar Drops Ahead Of Inflation Data, Fed Chair Yellen's Speech

The U.S. dollar drifted lower against its major rivals in early European deals on Friday, as traders focus on inflation report for April as well as the Federal Reserve Chair Janet Yellen's speech, due later in the day, for more hints about the outlook of the world's biggest economy.

The U.S. Labor Department is set to release consumer prices for April at 8:30 am ET. Consumer price inflation is expected to slow to 0.1 percent on month, from a 0.2 percent gain in March.

Excluding food and energy, the inflation is seen at 0.2 percent, same as last month.

Yellen is due to speak on the economic outlook before the Greater Providence Chamber of Commerce Economic Outlook, after the Fed minutes showed that most Fed members had considered June rate hike as premature.

Disappointing economic data released yesterday reinforced speculation that the Fed may raise interest rates only later this year. While weekly jobless claims increased more-than-expected in the week ended May 16, existing home sales declined unexpectedly in April, separate reports showed yesterday.

The currency was down against its major rivals, expect the pound, in the Asian session.

The greenback that ended yesterday's trading at 0.9366 against the franc and 1.5659 against the pound dropped to 0.9329 and 1.5689, respectively. The next possible support for the greenback is seen around 0.90 against the franc and 1.58 against the pound.

The greenback slipped to a 2-day low of 120.63 against the yen, compared to Thursday's closing value of 121.02. Continuation of the greenback's downtrend may lead it to a support around the 119.5 mark.

The greenback edged down to 1.1169 against the euro, from yesterday's closing quote of 1.1110. The greenback is seen finding support around the 1.15 level.

Looking ahead, German Ifo business climate index for May and U.K. public sector finances data for April are due.

Besides U.S. inflation data, Canada consumer prices for April and retail sales foM march are set for release in the New York session.

At 9:30 am ET, the European Central Bank President Mario Draghi, along with Bank of England governor Mark Carney and the Bank of Japan governor Haruhiko Kuroda will participate in a panel discussion at the ECB forum on Central Banking titled "Inflation and unemployment in Europe," in Portugal.