The dollar fell against the euro on Friday as markets eagerly await clarification on when Spain will formally ask for a bailout.

The ICE dollar index, which measures the greenback against a basket of six currencies, fell to 79.676 from 79.782 on Thursday.

The euro traded 0.2% higher at $1.2953 on Friday but remained lower against the greenback for the week by about 0.6%.

A possible bailout is widely seen as beneficial to the euro as it removes persistent uncertainty about the underlying health of financial markets. It would also trigger the European Central Bank's bond-buying programme, which is supposed to lower borrowing costs for struggling Eurozone economies.

Appetite for risk was also spurred a surprisingly upbeat US consumer sentiment report. A report by the University of Michigan Thomson Reuters showed consumer sentiment surged to its highest level in five years.

Meanwhile the euro was also boosted by data showing output at Eurozone factories grew more than expected in August.

The single currency firmed 0.3% to ¥101.55 on news that Japan's Softbank will buy a majority stake in Sprint Nextel in a deal worth around ¥1trn. The dollar bought ¥78.41 versus ¥78.34 the previous session.

Sterling rose to $1.6078 from $1.6045 Thursday but fell 0.4% for the week as speculation about Spain's bailout fuelled demand for risk currencies. However concern about the weak UK economic outlook and the potential of monetary easing kept bigger gains at bay.

The Australian dollar fell to $1.0231 from $1.0262 and gained 0.5% over the week.


CJ

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